Deutsche Bank

As a result of the global commodity weakness, global stocks have fallen for the first time in six days as the sell-off in commodities continued, dragging both US equity futures and European stocks lower. However, putting this in context, last week the MSCI All Country World Index posted its biggest weekly gain in six weeks: alas, without a coincident rebound in commodity prices, it will be merely the latest dead cat bounce.

The hardest questions we are trying to reconcile here are how is that possible to see all these signs of weakness under the surface – including weak commodities, tightening credit, retrenching consumer spending – being balanced by very strong equity markets and upbeat employment picture. One of these sides has to be wrong in its assessment of the current macro environment, and seeing both of them extending well into the future appears unlikely to us.

"Can the government maintain this strategy of flooding the oil market? In our view, it is unlikely that Saudi leaders would want to exacerbate its ongoing reserve drain by pushing prices below $40/bbl. After all, pressure will quickly build on the riyal’s 30 year peg to the USD if Brent crude oil prices keep falling."

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SUNE is down almost 8% this morning, backunder $3.00, as yesterday Twitter-based "Blackstone buying SUNE Debt" rumor is dashed in the epic realization that you might be the last one in line for the exits...

...or to put it another way, here is what Deutsche Bank believes are the only two "upside risks" for markets - "a smooth start to Fed tightening" and "eurozone growth surprises to the upside." Other than that, hope that The Fed reverts to old norms and eases, un-tightens is the last best hope for this decoupled, divergent equity market...

Well, we’re less than one hour away from the release of the October Fed minutes. Who’s excited? Despite the fact that the October NFP print came after the FOMC meeting, market “bird watchers” will still be keen on parsing every last word for hints around what the very “data dependent” Fed may or may not announce next month. Here's an early take on what to look for.

“Do not involve Sales in anyway [sic] whatsoever.  In fact avoid mentioning the existence of the whole BATS Last Look functionality.  If you get enquiries just obfuscate and stonewall.... for the future, sales absolutely 100% do not know about the existence of last look and it shouldn’t be a concern for them...  IF any client does call up about a rejected trade . . . it is important that you state in any communication ‘THE TRADE WAS REJECTED BECAUSE OF LATENCY.’ . . . DO NOT talk about P&L on trades."

The Fed's Bill Dudley confirmed this morning why The Fed is so keen to raise rates no matter what - "liftoff will signal The Fed's confidence in the US economy." In other words, the 'con' continues... We have two simple questions - 1) Given the chart below, which 'economy' is The Fed confident in? and 2) What is The Fed going to say when they reverse the rate hike (as we have seen with every nation who has tried to raise rates since 2010)?

As @the_real_fly says, "it will SUNE be over" and perhaps catalyzing the ending is a brand new note by Axiom Capital Research titled "The Nightmare Before Christmas” – Credit Event Appears More Likely than Presaged, in which the analyst Gordon Johnson sees at least another 33% of downside before the stock finally stabilizes at something resembling a fair value of $2.00

The Trade-Weighted US Dollar has risen almost 19% over the past 18 months - the fastest pace of increase on record - and is now at its highest level since 2003. As we noted previously, this is not unequivocally good for American corporate profits... and if you believe The Fed's Stan Fischer - the worst effects of this soaring exchange rate are yet to come... Most of the impact of exchange rate moves come after that first year. So we’re only just getting into the business end of the impact of the dollar’s strength on the US economy. And the Fed are about to hike?

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"They helped us understand what was going on beyond what you see on the screens."

We just got a confirmation that Ackman may not only not have been "brazenly intelligent" but was downright stupid when moments ago we learned that a District Judge in Santa Ana, California, David Carter, has said Valeant and Ackman must both face a lawsuit accusing them of insider trading in Allergan before making an unsuccessful takeover bid for the maker of Botox.

The ongoing failure of China to achieve any stabilization in its economy, after already cutting interest rates six times in the past year, and the prospect of a U.S. interest rate hike in December, had made markets increasingly jittery and worried which is not only why the S&P 500 Index had its biggest drop in a month, but thanks to the soaring dollar emerging market stocks are falling for a fourth day - led by China - bringing their decline in that period to almost 4 percent, and the global stock index down for a 5th consecutive day.