Bank of England

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.

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)
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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.

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• 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"...

Sterling fell sharply yesterday as traders became nervous of a possible vote for Scottish independence. The referendum on Scottish independence from the United Kingdom takes place on Thursday 18th September. 

While the referendum and the potential impact of an independent Scotland have been on the horizon for some time, the approaching vote in two weeks is causing upheaval for the British pound in currency markets, and also more general macro uncertainty in the regional economic and monetary system.

The chance of EURCHF breaking the peg at 1.2000 have increased from 10% to 25-30% based on European Central Bank monetary policy, geopolitical risk and a lack of policy choices for the Swiss National Bank. This means that being long EURCHF no longer is a safe bet and although the 70% chance of the floor being both defended and protected is still high, the tail-risk involved is becoming too concerning.

Gold Bears Have Wind at their Backs as Technicals likely to fail to downside over Near-Term.

The US may be closed on Monday, but after a summer lull that has seen trading volumes plunge to CYNKian lows, activity is set to come back with a bang (if only for the sake of banks' flow desk revenue) with both a key ECB decision due later this week, as well as the August Nonfarm Payrolls print set for Friday. Among the other events, in the US we have the ISM manufacturing on Tuesday, with markets expecting a broadly unchanged reading of 57.0 for August although prices paid are expecting to decline modestly. Then it is ADP on Thursday (a day later than usual) ahead of Payrolls Friday. The Payrolls print is again one of those "most important ever" number since it comes ahead of the the September 16-17 FOMC meeting and on the heels of the moderation of several key data series (retail sales, personal consumption, inflation). Consensus expects a +225K number and this time it is unclear if a big miss will be great news for stocks or finally bad, as 5 years into ZIRP the US economy should be roaring on all cylinders and not sputtering every other month invoking "hopes" of even more central bank intervention.

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• Europe holds nerve as Russia-Ukraine warnings ratchet up (Reuters)
• China manufacturing slowdown ripples through region (Reuters)
• Brazil enters recession in election blow to Rousseff (Reuters)
• Disruptive Hong Kong protests loom after China rules out democracy (Reuters)
• Coal Miners See Signs of Recovery as Prices Stabilize (WSJ)