Australia

"If the United States continues with these kinds of dangerous, provocative acts, there could well be a seriously pressing situation between frontline forces from both sides on the sea and in the air, or even a minor incident that sparks war."

In late 2014 something happened: for whatever reason the most unregulated aspect of China's financial system, its shadow banks, not only stopped lending money but actually went into reverse, thus putting a lid on China's Total Social Financing expansion, which had been the world's "under the radar" growth dynamo for so many years. At that moment not only did China's ghost cities officially die, but it meant an imminent collapse for China's steel industry. That collapse has arrived.

Passports are nothing more than a form of control - a way to obtain oodles of personal information and to restrict one of the most basic freedoms of humanity - the freedom to move. So you can imagine how excited we were when we read about Australia’s government announcing a program to eliminate passports. Great news, right? Well, no...

"Australia and the U.S. should not light a fire and add fuel to the flames"...

We would say today's main event is the culmination of the Fed's two-day meeting and the announcement slated for 2 pm this afternoon, however with the 90 economists polled by Bloomberg all expecting no rate hike, today's Fed decision also happens to be the least anticipated in years (which may be just the time for the Fed to prove it is not driven by market considerations and shock everybody, alas that will not happen). And considering how bad the economic data has gone in recent months, not to mention the recent easing, hints of easing, and outright return to currency war by other banks, the Fed is once again trapped and may not be able to hike in December or perhaps ever, now that the USD is again surging not due to its actions but due to what other central banks are doing.

In the event of a systemic European banking crisis, however, laws could be changed at the stroke of a pen and “bail-in” mechanisms could become fully operational. Also, the comforting guarantee of €100,000 ($100,000 or £80,000) would likely be reduced in such a crisis.

Two biggest move overnight came from everyone's favorite carry pair, the USDJPY, which may have finally read what we said yesterday, namely that with the Fed and ECB both doing its job, there is little need for the Bank of Japan to repeat its Halloween massacre for the second year in a row, and as a result will keep its QQE program unchanged. It promptly tumbled from its 121 tractor level, to just above 120.25, where BOJ bids were said to be found. With the FOMC October meeting starting today, the other overnight catalyst was not surprisingly the latest Hilsenrath scribe in which he removed any uncertainty about a Wednesday hike, "leaving mid-December as the central bank’s last chance to raise rates this year."

Yesterday Doi and Gina were back at 7 Little Bloomfield Street, Surry Hills. Their fingers crossed for greater fools because Doi was keen to offload his March purchase. The reason? Like most of us who've bought $800k crack shacks, Doi had a healthy dose of buyers' regret and came to his senses "after realising just how small the property was he decided to sell." How lucky was Doi? This is Australia! Doi found a plumber willing to go 60k higher than he'd paid six months earlier

• China export trade: -8.8% year to date
• China import trade: -17.6% year to date
• Industrial output crude steel: -3% year to date
• Cement output: -3.2% year over year
• Industrial output electricity: -3.1% year over year

and so on...

Butler believes that since the end of the Bretton Woods monetary system, there is a strong case for having higher allocations to physical gold. He warns of the risk inherent in gold ETFs due to the levels of legal indemnifications.

There is no alternative except to take cover because the latest stock market rip is based on pure central bank hopium. Indeed, Mario Draghi has confirmed once again that the world’s central bankers have a monetary death wish. Unlike the gamblers who bought Cramer’s top 49 stock picks, the best course of action is to sell, sell, sell—–and do it now.

To say that China, which a few days ago reported GDP of 6.9% which "beat" expectations and which a few hours ago reported Chinese home prices rose in more than half of tracked cities for the first time in 17 months, stunned everyone with its rate cut on Friday night, meant clearly for the benefit of US stocks, as well as the global commodity market, is an understatement: nobody expected this. As a result strategists have been scrambling to put China's 6th rate cut in the past year (one taking place just ahead of this weekend's Fifth plenum) in context. Here are the first responses we have seen this morning.

• CHINA CUTS BANKS’ RESERVE REQUIREMENT RATIO
• CHINA CUTS 1-YEAR LENDING RATE BY 0.25 PPT
• CHINA CUTS 1-YEAR DEPOSIT RATE BY 0.25 PPT
• CHINA CUTS RESERVE RATIO BY 0.5 PPT

Yesterday morning, when previewing the day's tumultuous events, we said that "Futures Are Firm On Hope Draghi Will Give Green Light To BTFD." And boy did Draghi give a green light, that and then some, when his press conference unleashed one of the biggest one-day US equity rallies in 2015. This morning it has been more of the same, with global market momentum on the heels of Draghi's confirmation that Europe's economy is again backsliding (it's a good thing, if only for stocks), leading to momentum for US equity futures, which together with soaring tech/cloud, earnings if no other, are on their way to take out recent all time highs.

Given what the Japanese have been subjected to in the past two and a half years of QQE, it is nearly criminal to suggest they need only more of it. None of it has worked as promised and stated, so what might have changed? Absolutely nothing except the arrangement of qualifiers and excuses that litter the same shared central bank speech delivered over and over of late. Kuroda says “robust”, Yellen proclaims “strong”, and both only confirm they live not of this world’s economy.