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How Politics Poisoned The Economy

There was only one officer for every 10 enlisted men when the U.S. won World War II. Now there are twice as many officers and four times as many generals – and we haven’t won a war since. As President Reagan’s chief budget advisor David Stockman foresaw 30 years ago: we are seeing the final “triumph of politics.” The elections are just a sideshow.

Gundlach: "We Got The Bearish Signal; Stocks Are Going Down - You Can Feel It"

"We got the bearish signal," Gundlach said about the S&P 500 dropping below 2,130 on Monday. "It is more noteworthy and reinforces the bear signal that the market is down a lot today. The dam is breaking, you can feel it." Gundlach expected another 5-10% drop in the S&P 500, which closed at 2,111.72 on Tuesday.

RBC: "Be Prepared For Another 'Vol-Control' Deleveraging Wave"

"At this frantic vol buying pace, with VIX +17% on the day, it won’t take much longer until further mechanical deleveraging is triggered from these extremely popular retail and ALM vehicles  Long story short, be prepared for another deleveraging wave (which could be happening ‘real time’ as I send) the longer vols stay at these levels, bc they’ve just been ‘stuck’ so low in recent weeks."

Don’t Sweat The Election. The Next Crisis Is Already Baked Into The Cake

From here on out politics are only relevant at the extremes - major war, corruption scandal, martial law etc. Short of that, the fiat currency/fractional reserve banking world has such institutional momentum that it really won’t matter whether Trump is picking on bankers and building his wall or Clinton is protecting Wall Street and raising taxes. Debt will keep soaring as it has under every president since Reagan and jobs will disappear as machines replace people, thus bringing the end of the current system inexorably closer.

Frontrunning: November 1

  • There is a bubble in articles about China's bubbles: Asset Bubbles Threaten China’s Economy (WSJ)
  • Hillary Clinton’s Wall Street Fundraising Benefited From Loophole In Federal Anti-Corruption Rule (IBT)
  • Clinton and Trump Prepare for Possibility of Election Overtime (BBG)
  • Trump Leads Clinton by 1 Point in New Poll as Enthusiasm Declines (ABC)
  • Investigating Donald Trump, F.B.I. Sees No Clear Link to Russia (NYT)

Global Bond Selloff Resumes; Stocks Rise Following Strong Chinese Data

With October, the worst month for stocks since January, now in the history books S&P futures are eager to telegraph that the streak of five consecutive will end, with a modest gain of 0.3% in overnight trading, coupled with mixed global markets as the global bond selloff returned after strong Chinese economic data prompted concerns about rising global inflation.

Bank Of Japan Leaves Policy Unchanged; Warns Growth, Inflation Outlook Skewed To Downside

Expectations for the BoJ meeting tonight were for no change (and perhaps lowering its inflation and growth outlooks) and markets were braced for a whole lot of nothing with overnight USDJPY vol at its lowest of the year (for a BoJ meeting). Sure enough that is what they got. "No change" across anything policy but cuts to inflation expectations (as well as warnings of a downside skew for growth) left the yen slightly higher.

Q3 GDP Jumps 2.9% On Rise In Inventory And Exports, Offset By Weak Consumption And Investment

For once it appears that the Atlanta Fed, with its 2.1% Q3 GDP nowcast was overly pessimistic, and moments ago the BEA reported that in the third quarter, US GDP increased at an annual rate of 2.9%  according to the first "advance" estimate released up more than double from the Q2 real GDP of 1.4%, and beating Wall Street consensus of a 2.6% rise in the quarter.

Deutsche Bank Reports Unexpected Q3 Profit, But Wall Street Yawns Asking For More

After serving much drama to its shareholders - and global markets - over the past couple of months, when its stock tumbled to all time lows, Deutsche Bank provided some relief when earlier this morning it reported a modest, unexpected profit of €256 million for the third quarter on lower litigation and restructuring costs, beating consensus estimate. However, to many on Wall Street, this wasn't enough.

Hyperinflation Looms As 'Black Market' Egyptian Pound Crashes To Record Low

With all eyes on the drop in the British Pound, it is another 'pound' that is utterly collapsing. Despite its official exchange rate is 8.88 per dollar, Egypt’s pound dropped to 16.11 per dollar in the black market, another record that extends declines over the past month to 19% and down over 40% since it devalued in March.