Lester Holt: The Third Debater?

At last night’s debate, Donald Trump faced off not just against Hillary Clinton, but against moderator Lester Holt.

Global Trade To Grow At Slowest Pace Since Financial Crisis

According to the latest WTO forecast, global trade is set to grow at the slowest pace since the financial crisis: the WTO now expects world trade will again grow more slowly than expected in 2016, expanding by just 1.7%, well below the April forecast of 2.8%. This means that 2016 will be the first time in 15 years that the ratio between trade growth and world GDP has fallen below 1:1. 

Deutsche Bank Contagion: Nord LB, Lufthansa, Korean Air Pull Bond Deals

As noted earlier, the post-debate market relief rally has given way to concerns over banking woes, with stocks turning lower in Europe as focus returns to Deutsche Bank. More troubling is the overnight news that two German issuers - Nord LB and Lufthansa  - followed quickly by Korean Air Lines, have pulled their bond deal as "uncertainty on the credit front appears to be weighing" on the broader market.

Richmond Fed Disappoints: Employee Head Count Crashes To 7-Year Lows

It would appear the people who The Conference Board were asking about their 'confidence' were not from the Richmond fed region. A 3rd massive contraction in the last 4 months was not the worst of it as the "number of employees" subindex crashed to -13 - its lowest since June 2009.

US Services PMI Bounces But Employment Hits 33-Month Lows

US Services PMI bounced in September (flash) to 51.9 - the highest since April, but a weaker expansion of new business had a negative impact on employment growth in September. Staffing levels continued to rise, but the latest increase was only slight and the slowest since March 2013. The rate of job creation has now eased in two consecutive months.

US Elections: Neither Free Nor Fair

Lecturing on democracy is a distinctive feature of American foreign policy. Does the US really provide an influential role model for how elections should run in other countries? Is America really a shining example of real democracy? "Forbear to judge, for we are sinners all." Domestic and international experts rate the US elections as the worst among all Western democracies. According to Electoral Integrity Project, Denmark, Finland, Norway and Sweden are at the top of the ranking, while the US scores 62.

US Home Price Growth Slowest In A Year

US home prices grew at a disappointing 5.02% YoY in July (missing expectations of 5.10% and the lowest since Aug 2015). Portland, Seattle, and Denver reported the highest year-over-year gains among the 20 cities over each of the last six months.

Crude Crashes As Iran Says "No Deal" After Saudi Offer

And sure enough, as we noted yesterday, the Saudi "cut" offer that juiced crude yesterday was nothing but a strawman to enable them to pinpoint blame on Iran for the failure of talks. Unwilling to freeze its output - even based on the 'offer' of Saudi cuts - Iran's Bijan Zanganeh exclaimed "it’s not our agenda to reach agreement in these two days," blowing a hole in the hope train for crude's recovery.

Trump, Trade, & Taxes

The best way to restart investment (and thus employment opportunities) is to make the U.S. a magnet for productive capital rather than a graveyard of tax-avoidance strategies.

Goldman Cuts Oil Price Target From $50 To $43 On Rising Global Surplus

While we await every new headline out of Algiers, overnight Goldman threw in the towel on its "transitory" oil market bullishness, and in a note by Damien Courvalin looking "Beyond Algiers, Weakening Oil Fundamentals", the bank cut its Q4 oil price target from $50 to $43, as the bank admits the previously anticipated rebalancing will take longer to achieve, and now expects "a global surplus of 400 kb/d in 4Q16 vs. a 300 kb/d draw previously."

Frontrunning: September 27

  • Deutsche Bank Returns to Haunt Merkel in an Election Year (BBG)
  • Saudis, Iran dash hopes for OPEC oil deal in Algeria (Reuters); Iran Doesn’t Want Oil Deal in Algiers, Won’t Freeze Output (BBG)
  • Debate of century lives up to its billing (The Hill)
  • Candidates Spar in Debate, Offer Vastly Different Visions for Leading the U.S. (WSJ)
  • Clinton gains in online betting markets after U.S. presidential debate (Reuters)
  • Presidential Debate Illuminates Voters’ Stark Choice (WSJ)

DOJ Is Assessing Size Of Criminal Penalty It Can Levy On Volkswagen "Without Putting Company Out Of Business"

When two weeks ago the DOJ announced a whopping $14BN settlement "ask" from Deutsche Bank, some wondered if there was an element of punitive retaliation aimed at Europe's "assault" on Apple's taxes. That question will surely grow louder when overnight Bloomberg reported that the DOJ is now assessing "how big a criminal fine it can extract from Volkswagen AG over emissions-cheating without putting the German carmaker out of business."

"Hillary Rally" Fizzles As DB Hits New Record Low; Volkswagen Slammed; Oil Slides On Iran Statement

A rally in global risk that started during last night's first presidential debate on the market's take that Hillary came out on top fizzled, following news that the DOJ is assessing how big a criminal fine it can extract from Volkswagen (-3.8%) over emissions-cheating "without putting the German carmaker out of business", while Iran's oil minister Zanganeh told reporters Iran is ununwilling to freeze output at current levels. Deutsche Bank dropped to a new all time low while its default risk hit fresh record highs.

Debate Post-Mortem: Rematch Required As Commentators Split On Debate Winner, Markets Give Hillary Nod

From "big, fat, ugly bubbles" to "trumped-up trickle-down" economics, tonight's debate had something for everyone. One-liners and soundbites were dropped like confetti with strange facial gestures, delicate coughs, and direct jabs flying left, right, and center. As far as the results go, it's anyone's guess: Lester Holt was soundly beaten by everyone; the markets (S&P Futs and the Mexican Peso) suggest a Trump loss; Trump won Twitter; online polls were undecided with a slight nod to a Trump victory; as commentators were mixed, most siding along their ideological bias.

Dangerous Bubbles In Plain Sight

Relative to disposable income, the value of household financial assets now far exceeds the last two bubble peaks. And that has happened in an economic environment which suggests just the opposite. To wit, valuation multiples and cap rates should be falling owing the fact that the productivity and growth capacity of the US economy has been heading south ever since the turn of the century. So here’s the danger...