Bank of England
- -0.07%: Germany Secures Record Low Funding Cost at Bond Auction (WSJ)
- Pentagon Sees Possible Role for U.S. Ground Forces Against Islamic State Militants (WSJ)
- China Joins ECB in Adding Stimulus as Fed Scales Back (BBG)
- Stealthy or Normal? Analysts Diverge on PBOC’s Action (BBG)
- Sony Forecasts Massive $2B Loss as Smartphones Lag (AP)
- Islamic State campaign tests Obama's commitment to Mideast allies (Reuters)
- Brent Crude Rebounds as Libya’s Sharara Oilfield Shut (BBG)
- Market calm over Scottish vote at odds with disaster warnings (Reuters)
It has been a story of central banks, as overnight Asian stocks reversed nearly two weeks of consecutive declines - the longest stretch since 2001 - and closed higher as the same catalysts that drove US equities higher buoyed the global tide: a combination of Chinese liquidity injection (for the paltry amount of just under $90 billion; "paltry" considering Chinese banks create over $1 trillion in inside money/loans every quarter) and Hilsenrath leaking that despite all the "recovery" rhetoric, the Fed will not be turning hawkish and there will be no change in the Fed language today (perhaps not on the redline but Yellen's news conference at 2:30pm will certainly be interesting), pushed risk higher, if not benefiting US equities much which remains largely unchanged.
As the Scotish independence vote draws near and remains too close to call, some analysts are suggesting Plan B for Scotland may be to choose to opportunistically default. This has done nothing to calm concerns of the aftermath of a "yes" vote - despite US asset managers proclaiming it irrelevant. Nowhere is that more clear than, as The Independent reports, Britain’s banks have been quietly moving millions of banknotes north of the border to cope with any surge in demand by Scots to withdraw cash in the event of a Yes vote in Thursday's independence referendum, it has emerged. Bankers stressed there has been no sign yet of any increase in the amount of withdrawals from deposit accounts or ATMs, but the moves have been taking place over the past week or so in order to make sure ATMs do not run out on Friday in the event of a panic reaction to a “yes” vote.
- Snow is coming: OECD Cuts Economic Growth Forecasts (WSJ)
- World waits for white smoke from U.S. Fed (Reuters) - Understandable error: they meant "green"
- Scots Breakaway at 45% Odds as Economists Warn of Capital Flight (BBG)
- Ukraine President Poroshenko Faces Backlash Over EU Trade Deal Delay (WSJ)
- German Anti-Euro Party Advances in Merkel Homeland Voting (BBG)
- Clinton Hints at 2016 Run as Super-PAC Packs Iowa Steak Fry (BBG)
- Air France, Lufthansa Hit by Strikes in Fight for Future (BBG)
- U.S. sees Middle East help fighting IS, Britain cautious after beheading (Reuters)
- Ex-Billionaire Charged by Brazil With Financial Crimes (BBG)
The US economy is dead. The Fed has known this for a long time, but pumped it up to where it is now to draw in all the greater fools, the so-called big investors who have made money like honey from QE and ZIRP. They are the greater fools. The American real economy ceased being a consideration long ago. We’re in for big surprises, and they won’t be pretty, they’ll be pretty nasty. There are far too many people who think of themselves as smart who don’t see the difference between a theater play and a reality show. The Fed will raise rates because that will make the biggest banks the most money. There’s nothing else that matters. The Fed can’t revive the US economy, that’s just a foolish notion. But it can suck a lot of wealth out of it.
Investors pulled $27 billion out of UK financial assets last month - the biggest capital outflow since the Lehman crisis in 2008 - as concern mounted about the economic and financial consequences if Scotland left the UK, according to Reuters. Furthermore, Morgan Stanley said daily equity flow data pointed to "some of the largest UK equity selling on record."
There is now less than one week of campaigning remaining before the Scottish Independence Referendum, which takes place next Thursday, September 18.
The pro-union ‘no’ vote campaign is back in the lead this week after the latest opinion poll from pollsters YouGov put them at 52%, marginally ahead of the pro-independence ‘yes’ campaign.
Latest Scotland Poll Closes Gap Further: 49% Would Vote For Independence, 51% Against; Cable WobblesSubmitted by Tyler Durden on 09/12/2014 07:54 -0400
Yesterday's YouGov poll, which saw the "No" camp regain the lead with 52% of the vote, was said by some to be the end of the "Yes" momentum observed last weekend when the Yes posted its first majority since polling began, Then moments ago, the momentum in the momentum changed once again, with the Guardian releasing the latest Scottish referendum poll by ICM which took place between September 9-11 polling a "a representative sample of 1,000 people", and where the vote was said to be "too close to call", as the margin collapsed once again, this time shifting the momentum in favor of the Yes vote, which received 49% of the vote, and No getting 51%, however 17% of the voters are "yet to make up their minds."
Billions of dollars have already been lost in just a few days, since everybody realized the UK may actually split up. Many more billions will be lost in the coming week, as measures of volatility go through the roof. Neither the Yes side nor the No side have gone into this thing terribly prepared; there are a zillion questions surrounding the independence issue that won’t be solved before the vote takes place. Passports, currencies, central banks, monetary unions, there’s too much even to mention. Somewhere, emanating from the old crypts and burrows in which Britain was founded, we fear a hideous force may emerge to crush the Scottish people’s desire for self-determination, if only because that desire is a major threat to some very rich and powerful entities who found themselves as unprepared as Downing Street 10.
- British PM begs Scots: Don't rip apart our UK 'family of nations' (Reuters)
- Obama has become Bush: Obama’s Task: Rally U.S. Public, Allies in Terror Fight (BBG)
- Alibaba's record IPO covered after first few roadshow meetings (Reuters)
- Ferrari chairman Luca Di Montezemolo to quit after 23 years (BBC)
- Combat Reversals Pressure Assad (WSJ)
- Top LBO Fund Investors Pile on Leverage to Boost Returns (BBG)
- BOJ's Iwata upbeat on economy, unfazed by post-tax hike slump (Reuters)
- Carney Can’t Escape Housing as Debt Colors BOE Policy (BBG)
- Detroit Clears Crucial Hurdle on Bankruptcy (NYT)
- Showtime for Apple: Big phones, smart watches and high expectations (Reuters)
- Bank of England Gov. Mark Carney Signals Spring Rate Rise (WSJ)
- Quebec Shows Scots Question Returns Even If Answer Is No (BBG)
- Hush money with a 9 year vesting period: Ex-SAC Fund Manager Martoma Sentenced to Nine Years in Prison (BBG)
- Dreams on hold, Brazil's 'new middle class' turns on Rousseff (Reuters)
- Fed to Hit Biggest U.S. Banks With Tougher Capital Surcharge (WSJ)
- Egypt court sentences Brotherhood leader, cleric to 20 years in jail (Reuters)
Straight-forward discussion about the investment climate and the week ahead. Light on hyperbole, heavy on analysis.
Central bank stimulus is not leading to virtuous circles but to vicious ones. How can we get out? – Only by changing our attitudes to monetary interventions fundamentally. Only if we accept that interest rates are market prices, not policy levers. Only if we accept that the growth we generate through cheap credit and interest-rate suppression is always fleeting, and always comes at the price of new capital misallocations. The prospect for such a change looks dim at present. The near-term outlook is for more heavy-handed interventions everywhere, and the endgame is probably inflation. This will end badly.
- Global stocks bounce on sign ECB could launch ABS program (Reuters)
- Putin unveils Ukraine ceasefire plan, France halts warship (Reuters)
- Poroshenko Flummoxes Investors With About-Face on Truce (BBG)
- No Free Lunch for Companies as IRS Weighs Meal Tax Rules (BBG)
- Turkey Struggles to Halt Islamic State 'Jihadist Highway' (WSJ)
- Lego Becomes World's Largest Toy Maker on Movie Success (WSJ)
- U.N. says $600 million needed to tackle Ebola as deaths top 1,900 (Reuters)
- Goldman Sachs Named 'Stabilization Agent' for Alibaba Stock Offering (WSJ)
Even as the NATO summit began hours ago in Wales, conveniently enough (for Obama) at the venue of the 2010 Ryder Cup, so far today geopolitics has taken a backseat to the biggest event of the day - the ECB's much hyped and anticipated announcement. So anticipated in fact that even as it has been priced in for the past month, especially by BlackRock which is already calculating the Christmas bonus on its "consultancy" in implementing the ECB's ABS purchasing program and manifesting itself in record low yields across Europe's bond market, Reuters decided to milk it some more moments ago with the following blast: "Plans to launch an asset-backed securities (ABS) and covered bond purchase programme worth up to 500 billion euros are on the table at Thursday's European Central Bank policy meeting..." The notable being the size of the program, which at €500 billion, is precisely what Deutsche Bank said a week ago the size of the ABS program would be. Almost as if the bank with the world's biggest derivative exposure is helping coordinate the "Private QE"...