Deutsche Bank

It has been a seesaw session with U.S. stock index futures following their dramatic buying burst in the last half hour of market trading yesterday by first rising, then falling, then rising again alongside European equities both driven almost tick for tick with even the smallest move in the carry trade of choice, the USDJPY, even as Asian shares trade near intraday highs after China’s leaders signaled they will take further steps to support growth.

"There no obvious solution. This is why we think that a second election around March 2016 is as likely as any of the alternatives. [In fact,] an early election in the short or medium term seems the most likely outcome."

The premises of the rate increase are several: that the Fed knows best what interest rate is good for the economy... that a recovery is sufficiently established to permit an end to the emergency micro rates of the last seven years... and that otherwise everything is more or less hunky-dory. And they are all false!

“To the intelligent man or woman, life appears infinitely mysterious, but the stupid have an answer for everything.” ~Edward Abbey

At 2 p.m. EST, the only thing the financial world will care about and discuss will be the Fed's [first rate hike in 9 years|epic disappointment]. So for those who still haven't made up their mind about what the Fed's [dovish|non-dovish] rate hike means, here is all you need to know.

"For those who think Fed hikes are “good” for economic confidence, it would also be odd for the Fed to suggest, implicitly via a lowering of the dots that things were not quite so rosy. On balance the Fed therefore looks set for effectively “insisting” on their median dots – closer to a hawkish rather than dovish hike."

Soaring junk bond redemptions; rising investment grade (and high yield) yields pressuring corporate buybacks; record corporate leverage and sliding cash flows; Chinese devaluation back with a vengeance; capital outflows from EM accelerating as dollar strength returns; corporate profits and revenues in recession; CEOs most pessimistic since 2012, oh and the Fed's first rate hike in 9 years expected to soak up as much as $800 billion in excess liquidity. To Wall Street's strategists none of this matters: as Bloomberg observes, virtually every single sellside forecasts expects "no end to the bull market."

The real "data" that The Fed is "dependent" on...

Because when your year-end bonus depends on you not seeing it coming, you don't.

"either the Fed achieves its goals quickly to a very low terminal Funds rate. Buy bonds. Or they need to be even more aggressive. Buy even longer duration bonds. The choice is more about where to put the long leg of the curve flattener not about whether to steepen or flatten the curve."

In light of surging concerns about mutual and hedge fund fixed income (and soon other asset classes) "gating", "runs" or outright liquidation, Deutsche Bank has prepared the following infographic which summarizes the main choke points which predispose both open and closed-end funds to runs or outright shutdown.

With just 72 hours to go until Yellen decides to soak up to $800 billion in liquidity, suddenly we have China and the Emerging Market fracturing, commodities plunging, and junk bonds everywhere desperate to avoid being the next to liquidate.

China’s sweeping crackdown on sellers, “manipulators”, frontrunners, financial journalists and anyone else “suspected” of acting in such a way as to sow fear and uncertainty in the wake of the dramatic meltdown in Chinese equities that unfolded over the summer has ensnared money managers, high profile executives, and government officials alike. Earlier this week, it reached a crescendo with the disappearance of Guo Guangchang, known to some as “China’s Warren Buffett. We now have a bit more in the way of color regarding Guo’s detention and sure enough, he’s being “held in connection with an investigation.”