- European shares slip as easing expectations fade (Reuters)
- Valeant and Pharmacy More Intertwined Than Thought (WSJ)
- The Pawn Isolated: Valeant, Philidor and the Annals of Fraud (WSJ)
- Strongest Afghan Quake Since 1949 Triggers Search for Survivors (BBG)
- EU Agrees To Tighten Border Controls And Slow Migrant Arrival (AP)
- Volkswagen Suspends More Employees (WSJ)
- Volkswagen Loses Global Sales Lead to Toyota Amid Diesel Scandal (BBG)
In our Chinese stock market wrap following Friday's unexpected rate cut, which saw the Shanghai Composite storm out of the gate, we said that "we would not be surprised to see China's stocks sliding back into the red very shortly as "sell the news" concerns return, and as the increasingly more addicted "markets" demand even more liquidity from central banks just to stay unchanged, let alone rise to new all time highs." Sure enough, with just minutes to go before the close, the SHCOMP wiped out all its daily gains and was set for a red close had it not been for the "national team" miraculous last minute intervention which was inevitable after Friday's PBOC rate cut, and which lifted the composite 0.5% into the green as the euphoria was rapidly evaporating.
With crude prices still stuck in the doldrums, economists at Handelsbanken say the Norges Bank will soon be forced to cut rates to zero in order to stave off a looming recession. What we want to know is this: if the housing bubble that the Norges Bank has helped to inflate bursts, how does the central bank plan to deal with the fallout (which will be amplified by the economic drag from low oil prices) when it has exhausted its counter-cyclical capacity by cutting rates to zero?
If you thought we'd seen the depths of NIRP, think again because as Deutsche Bank notes, the ECB, Riksbank, SNB, and Nationalbank will likely dive further into the monetary Twilight Zone in the months ahead. Only when rates become negative enough to spark a depositor revolt will we have reached the "real" lower bound, but at that point, it will be far too late...
A beleaguered Deutsche Bank is set to slash the investment bank bonus pool by some $566 million as John Cyran's effort to right a sinking ship continues. As Bloomberg reports, "no decision has been taken and the biggest reductions are likely to impact employees in the fixed-income business. Some managing directors may have their entire bonus scrapped, according to the person."
The Morning After: Valeant Default Risk Soars After Called Next "Tyco", Sellside "Analysts" HumiliatedSubmitted by Tyler Durden on 10/22/2015 09:08 -0500
As always happens after shocking events like yesterday which "nobody could have possibly predicted", watching the Penguin gallery reel in its humiliation is absolutely worth the price of admission.
Tomorrow morning Mario Draghi is widely expected to if not announce an extension, or expansion, of the ECB's QE program, than to at least jawbone sufficiently, and push the EURUSD lower from its recently anchored level in the 1.10-1.20 range. But what are the specifics of Draghi's announcement: will he merely expand the monetization limit per security, as he did in early September, will he increase the universe of eligibile securities, or will he simply extend the maturity of the non-open ended QE from September 2016 to some indefinite date? The following list, courtesy of Bloomberg, summarizes what the sellside universe believes Draghi will unveil in just under 12 hours.
- Canada's Trudeau topples PM Harper in shock election win (Reuters)
- Where Canada’s Harper Hit Hurdles (WSJ)
- Pugnacious Trudeau Steps Out of Father's Shadow and Into Power (BBG)
- European Stocks Decline, Euro Rallies as ECB QE Optimism Fades (BBG)
- Valeant, Under Pressure About Price Increases, Plans Changes (WSJ)
- Syrian rebels say they receive more weapons for Aleppo battle (Reuters)
"Instead of processing a net value, the person processed a gross figure. This meant the trade had “too many zeroes”, said one of the people."
And as everyone knows, "too many zeroes", is the technical term for you royally fucked up.
News That Matters
The LBMA wants to boost transparency and invited the market to suggest improvements including considering a new electronic platform that may lower trading costs and improve efficiency.
- Great News: China’s GDP Growth Beats Forecasts as Stimulus Supports Spending (BBG)
- Oh wait, maybe not: China GDP: Deflategate Comes to Beijing (WSJ)
- Actually, definitely not: Shanghai rebar falls to record low after weak China GDP (Reuters)
- But who cares: European Shares Gain on Earnings as Bonds Drop, Metals Decline (BBG)
The key overnight event was the much anticipated, goalseeked and completely fabricated Chinese economic data dump, which was both good and bad depending on who was asked: bad, in that at 6.9% it was below the government's 7.0% target and the lowest since Q1 2009, and thus hinting at "more stimulus" especially since industrial production (5.7%, Exp. 6.0%) and fixed spending also both missed; it was good because it beat expectations of 6.8% by the smallest possible increment, and set the tone for much of Europe's trading session, even if Asia shares ultimately closed largely in the red over skepticism over the authenticity of the GDP results. Worse, and confirming the global economy is now one massive circular reference, China accused the Fed's rate hike plans for slowing down its economy, which is ironic because the Fed accused China's economy for forcing it to delay its rate hike.
Moments ago, Europe's largest bank by assets and by gross notional derivatives, announced a raft of high-level management changes as part of an anticipated and sweeping restructuring of key divisions and senior-level committees. As WSJ reports, Colin Fan, the investment-banking co-head responsible for securities trading, will resign effective Monday. But the most profound change is that Deutsche Bank will split its investment bank into two pieces: one, focused on mergers and other deals, corporate finance and transaction banking services such as cash management, and the other on trading and global markets.
If you needed further evidence that global growth and trade are in a veritable tailspin, look no further than the latest trade data from India, which shows that both exports and imports fell by 25% in September. That's ok though, we're sure it's nothing another rate cut can't fix...