Archive - Sep 14, 2015 - Story

With tens of thousands of "lucky" Syrian immigrants due to arrive on American shores, it appears these hope-full refugeese may face life in the US is not as 'free' as they hoped. As AP reports, new government procedures have caused more than 400,000 current immigrants to lose healthcare coverage they received under Obamacare this year. The change in procedure shortens the timeframe during which foreign-born citizens can resolve eligibility issues, which has caused 423,000 people to lose their state-sponsored benefits - more than four times more than last year.

According to Reuters "Russia has positioned about a half dozen tanks at a Syrian airfield where it has been steadily building up defenses." The sources of this material escalation: two U.S. officials...  speaking on condition of anonymity to discuss the matter. Just like the "sources" on all Greek developments over the past 5 years. We can only hope the "anonymous" US officials will soon provide photographic evidence of their claims.

"It looks to me a bit like a bubble again with essentially a tripling of stock prices since 2009 in just six years and at the same time people losing confidence in the valuation of the market."

The USD strengthening since last July is the core driver of the global recession. Is the Fed insane enough to deepen the global recession by raising rates and pushing the U.S. dollar even higher? Who wins if the USD strengthens due to the Fed raising rates? In a globally interconnected economy, nobody wins.

The UK Labor Party's new leader Jeremy Corbyn has, rather unsurprisingly, is making controversial headlines already. His appointment of John McDonnell - an outspoken opponent to the independence of central banks: "in the first week of a Labour government, democratic control of the major economic decisions would be restored by ending the Bank of England’s control over interest rates," - as shadow chancellor has been met with derision in the British press. Initially described as a "nutjob" by The Telegraph, McDonnell's 'plan' to close the deficit is simple - instead of cutting spending, he will dramatically raise taxes on businesses and the rich. The Telegraph then watered-down their perspective, we think, slamming McDonnell's policy as "cloud cuckoo land economics."

As Reuters reports, "Deutsche Bank aims to cut roughly 23,000 jobs, or about one quarter of total staff, through layoffs mainly in technology activities and by spinning off its PostBank division, financial sources said on Monday."

Europe's refugee crisis is getting worse by the day. Less than 24 hours after Germany announced it would impose border controls with Austria, followed promptly by the Czech Republic, Slovenia and now the Netherlands, German vice chancellor Sigmar Gabriel predicted that as many as 1 million refugees may arrive by the end of the year as other nations moved to fortify their frontiers. In the meantime, however, Europe is dramatically escalating measures to halt the influx and as AFP reported earlier today, the European Union has now approved military action against human traffickers in the Mediterranean Sea.

A disappointing lack of massive monetary manipulation in China overnight (despite terrible data), has helped provide some impetus to the downside in stocks as the major US indices have now given up the gains in the melt-up from Friday's close...

Having traded above $46 on Friday, WTI Crude is back to a $43 handle as it appears Iran's price cut, as we detailed here, sparked demand from China and India driving up Iran exports to 1 million barrels per day.

The title does give it away: the only event that everyone will be focusing on this week will be the Fed's announcement and Yellen's press conference on Thursday. Here is what else is on deck.

The EM FX carnage continues unabated heading into the FOMC as the Kazakh tenge plunges for a seventh consecutive day and the beleaguered Turkish lira slides to a new low as an obstinate central bank and an extraordinarily unstable political situation conspire to undermine confidence ahead of elections scheduled for November 1.

TURNBULL WINS PARTY BALLOT TO BECOME AUSTRALIAN PRIME MINISTER

"The eagerly awaited Fed meeting is upon us. Regardless of the actual decision, we suggest that the market impact could end up being positive. If the Fed does raise rates, but at the same time reassures the market that this will be a gradual process, it would be received well. If, on the other hand, the Fed delays the move, this could be interpreted as a signal that the Fed is aware of and is responding to recent market concerns." - JPM

• China stocks slide as data raises fresh economy worries (Reuters)
• Was Tom Hayes Running the Biggest Financial Conspiracy in History? (BBG)
• The Fed’s Policy Mechanics Retool for a Rise in Interest Rates (NYT)
• Germany re-imposes border controls to slow migrant arrivals (Reuters)
• Thousands flee California wildfire as homes go up in flames (Reuters)
• Bavarian minister says German border controls could last for weeks (Reuters)
• China sells record FX in August, shows pressure after devaluation (Reuters)

While any moves in the US stock market ahead of Thursday are largely irrelevant, as only Yellen's statement in 4 days will unleash epic algo buying or short covering (yes, according to JPM the Fed statement is bullish no matter what), it is what happened in China that is concerning, because while we had expected Chinese stocks to go nowhere in particular now that index future trading volumes have plunged by 99% or perhaps rise on hopes of even more easing after the latest terrible economic data, the Shanghai Composite dropped 2.7%, but it was the retail darling Shenzhen Composite which tumbled 6.7% - its worst selloff since August 25, while China's Nasdaq, the ChiNext crashed -7.5%.