Australia

A week ago, we penned "The Real Reason Why Germany Halted Its Gold Repatriation From The NY Fed", in which we got, for the first time ever, an admission by an official source, namely the bank that knows everything that takes place in Germany - Deutsche Bank - what the real reason was for Germany's gold repatriation halt after procuring a meager 5 tons from the NY Fed. Some took offense with this pointing out, correctly, that the gold held at the NY Fed in deposit form for foreign institutions had continued to decline into 2014 even despite the alleged German halt. Well, today we finally know the answer: it wasn't Germany who was secretly withdrawing gold from the NYFed, contrary to what it had publicly disclosed. It was the Netherlands.  Why did the DNB decided it was time to cut its gold held at the NY Fed by 122 tons? "It is no longer wise to keep half of our gold in one part of the world," a DNB spokesman said.

Are you waiting for the next major wave of the global economic collapse to strike? Well, you might want to start paying attention again. Three of the ten largest economies on the planet have already fallen into recession, and there are very serious warning signs coming from several other global economic powerhouses.

• Yellen Inherits Greenspan’s Conundrum as Long Rates Sink (BBG)
• West African Mining Projects Take Hit From Ebola Crisis (WSJ)
• Saudi oil policy uncertainty unleashes the conspiracy theorists (Reuters)
• Senate Rejection of Keystone XL Measure Sets Up 2015 Showdown (BBG)
• Ferguson, Missouri, remains on edge ahead of grand jury report (Reuters)
• Putin Said to Stun Advisers by Backing Corruption Crackdown (BBG)
• Italian ‘Invasion’ Has Swiss Fuming as Immigration Vote Looms (BBG)
• Apple and Others Encrypt Phones, Fueling Government Standoff (WSJ)

After weeks of relentless flashing red headline barrage whose only purpose was to force snap algo buying of the USDJPY pair time after time after time, Japan is once again out of FX algo danging carrots after moments ago Abe confirmed what everyone had known already: he called a snap election to seek a mandate for his decision to delay by 18 months a further sales-tax increase that had been planned for next year; he also said he would dissolve the lower house of parliament on Nov. 21 in preparation for an election in December, without specifying a date. Cited by the WSJ, Abe said "To ensure the success of Abenomics, I’ve concluded that it shouldn’t be carried out next October and instead be postponed by 18 months,” the prime minister told a nationally televised news conference, stressing that the additional tax burden would risk putting the economy back into deflation. “I will seek the people’s judgment over our economic policy."

Four years ago, bankers, politicians, and traders were patting themselves on the back after Petroleo Brasiliero (Petrobras) raised a stunning $70 billion in the world's largest share sale, as Bloomberg reported at the time, investors bet on its plans to double output within a decade by tapping offshore fields. Things haven't worked out so well...

Perhaps the biggest shock following last night's completely expected and very predictable (previewed here over a month ago) Japanese slide into triple- (actually make that quadruple) dip recession, is that it took the BTFTripleDip recession algos as long as they did to recover most of the overnight futures losses. Because after surging to 107 on a confused short squeeze kneejerk reaction, the USDJPY subsequently tumbled 150 pips to 105.50 as rationality briefly emerged, and the market wondered for a few brief hours if rewaring the destruction of one's economy is actually a prudent thing. Then, however, when European traders started walking into work, the now default USDJPY levitation on no volume came right back, and with that the correlation algo buying of E-mini futures, no doubt helped by the Bank of Japan itself taking advantage of the CME's ES liquidity rebate program. Because without confidence as expressed by the lowest and only common denominator left - global equities - there is nothing else.

If there were no puppet masters in Washington DC or the Kremlin, what would happen next week?  

Having been 'guest-of-honor' at the APEC Summit the previous week, it appears Russian President Vladimir Putin is getting the 'Obama-at-APEC' treatment at the G-20 meeting in Brisbane. Following his 'odd' shaped convoy of protection last week, The Independent reports Putin chose a different type of entourage this week as he headed to meet the world's leaders. Putin has stationed four warships close to Australian waters as he arrived in Australia. Having drawn ridicule from no lesser wit than Britain's David Cameron who sarcastically bleeted, "I didn't feel it necessary to bring a warship myself to keep myself safe at this G20, and I’m sure that Putin won’t be in any danger," when it came time for the team photo, it was clear what 'message' was being sent...

“I guess I’ll shake your hand but I have only one thing to say to you: you need to get out of Ukraine,” Harper told Putin, the prime minister’s spokesman Jason MacDonald said in an e-mail.

Putin’s response to the comment wasn’t positive, MacDonald said, without elaborating

In a historic move showing just how profound the collapse in global commodity demand and trade is, earlier today the Sydney Morning Herald reported that Australia's biggest coal exporter Glencore, which last year concluded its merger with miner Xstrata creating the world's fourth largest mining company and world's biggest commodity trader, will suspend its Australian coal business for three weeks "in a move never before seen in the Australian market, to avoid pumping tonnes into a heavily oversupplied market at depressed prices." Putting this shocking move in context, it is something that was avoided even during the depths of the global depression in the aftermath of Lehman's collapse, and takes place at a time when the punditry will have you believe that the US will decouple from the rest of the world and grow at 3% in the current quarter and in 2015.

• Moar central banks! Asian Stocks Rise Amid Stimulus Speculation; Topix Jumps (BBG)
• Syria rebels in south emerge as West's last hope as moderates crushed elsewhere (Reuters)
• Bufett's Berkshire to Buy Duracell Business From Procter & Gamble in $3B Deal (AP)
• Weak Demand, Real-Estate Slump Signal Headwinds for China (WSJ)
• China Slowdown Deepens as Leaders Said to Mull Cutting Target (BBG)
• Saudis Reject Talk of OPEC Market Share War as Oil Slides (BBG)
• Oil Tankers Stream Toward China as Price Drop Sparks Boom (BBG)

The relentless regurgitation of the only two rumors that have moved markets this week, namely the Japanese sales tax delay and the "surprise" cabinet snap elections, was once again all over the newswires last night in yet another iteration, and as a result the headline scanning algos took the Nikkei another 1.1% higher to nearly 17,400 which means at this rate the Nikkei will surpass the Dow Jones by the end of the week helped by further reports that Japan will reveal more stimulus measures on November 19, although with US equity futures rising another 7 points overnight and now just shy of 2050 which happens to be Goldman's revised year-end target, the US will hardly complain. And speaking of stimulus, the reason European equities are drifting higher following the latest ECB professional forecast release which saw the panel slash their GDP and inflation forecasts for the entire period from 2014 to 2016. In other words bad news most certainly continues to be good news for stocks, which in the US are about to hit another record high (with the bulk of the upside action once again concentrated between 11:00 and 11:30am).

On Sunday in Brisbane the G20 will announce that bank deposits are just part of commercial banks’ capital structure, and also that they are far from the most senior portion of that structure. With deposits then subjected to a decline in nominal value following a bank failure, it is self-evident that a bank deposit is no longer money in the way a banknote is. If a banknote cannot be subjected to a decline in nominal value, we need to ask whether banknotes can act as a superior store of value than bank deposits? If that is the case, will some investors prefer banknotes to bank deposits as a form of savings? Such a change in preference is known as a "bank run."

Would it be that bad? Of course it would, he’s is a communist.

There are things in this world which simply look plain stupid, and then there are those that at closer examination prove to be way beyond stupid...