Ford

Just before Lehman, these people had exactly zero predictive capabilities.

Just how much havoc does living within one’s means wreak?

Even domestic demand is getting hit, and the Draghi-Bernanke effect has kicked in.

And Monday, it became official.

In absence of really negative news, outside the heavier macro / sentiment data, the lukewarm Italian auction and US data, markets remained on a slight tentative rebound.

Will need to await further details and overnight analysis of the Spanish budget. Lots of reforms...

Hmm, and in how much time can all that be passed - if at all???

It was inevitable. After demonstrating for years that week after week after week domestic equity mutual funds saw outflow after outflow which now amounts to a third of a trillion since 2010, regardless of how the policy vehicle known as the stock market, long since populated almost exclusively by vacuum tubes, performed and coupled with inflows into bonds, it was only a matter of time before this happened. This being the historic announcement by Fidelity that as of Wednesday bond and money market assets now total $848.9 billion, more than half of the company's $1.6 trillion in managed assets. Ford O'Neil, a top bond manager at Fidelity, underscored the milestone on Wednesday during a media presentation in Boston. "The rise of bond and money market funds, including institutional assets, is a remarkable turn of events for Fidelity. The company built an empire in the 1980s and 1990s on stock funds and star stockpickers like Peter Lynch. Fidelity's stock mutual funds held $761 billion at the end of June... The rise of bond and money market funds, including institutional assets, is a remarkable turn of events for Fidelity. The company built an empire in the 1980s and 1990s on stock funds and star stockpickers like Peter Lynch. Fidelity's stock mutual funds held $761 billion at the end of June." So much for the empire that Peter Lynch built. Luckily we all know whom to thank - a certain Princetonian central planner who would make the 1954 Stalingrad politburo blush with envy.

• China To Maintain Prudent Monetary Policy (China Daily)
• Why Exit Is An Option For Germany (FT)
• China-Japan Ministers Hold 'Severe' Talks As Spat Damages Trade (Bloomberg)
• Eurozone Deal Over Bank Bailout In Doubt (FT)
• UBS Co-Workers Knew of Fake Trades, Adoboli Told Lawyer (Bloomberg)
• Banks Seek Changes To Research Settlement (FT)
• Secession Crisis Heaps Pain On Spain (FT)
• SEC: NY Firm Allowed HFT Manipulation (Bloomberg) - busted 'providing liquidity'?
• Germany To Tap Brakes ON High-Speed Trading (WSJ)
• Rajoy Outlines Fresh Overhauls (WSJ)
• BBC Apologizes To Queen Over Radical Cleric Leak (Reuters)
• British Banks Step Back From Libor Role (WSJ)
• Obama Seeks To Recast Ties With Arab World (FT)

• China carrier a show of force as Japan tension festers (Reuters)
• Draghi Rally Lets Skeptics Dump Spain for Bunds (Bloomberg)
• China’s Central Bank Injects Record Funds to Ease Cash Crunch (Bloomberg)
• Obama warns Iran on nuclear bid, containment 'no option' (Reuters)
• When Would Bernanke’s Successor Raise Rates? (WSJ) that's easy - never
• Italy's Monti Downplays Sovereignty Risk (WSJ)
• Portugal swaps pay cuts for tax rises (FT)
• Madrid faces regional funding backlash (FT)
• Berlin Seeks to Push Back New Euro-Crisis Aid Requests (WSJ)
• Race Focuses on Foreign Policy (WSJ)
• China Speeds Up Approvals of Foreigners’ Stock Investment (Bloomberg)

• World on track for record food prices 'within a year' due to US drought (Telegraph)
• Foxconn halts production at plant after mass brawl (BBC)
• Germany Losing Patience With Spain as EU Warns on Crisis Effort (Bloomberg)
• Fed Recovery Doubts Spur Investor Bid for Treasuries (Bloomberg)
• Japan protests as Chinese ships enter disputed waters (Reuters)
• In Shark-Infested Waters, Resolve of Two Giants Is Tested (NYT)
• China jails Wang Lijun for 15 years (FT)
• China closes in on Bo Xilai after jailing ex-police chief (Reuters)
• European Leaders Struggle to Overcome Crisis Stalemate (Bloomberg)
• Politicians 1: Austerity 0 - Portugal Gives Ground on Worker Contributions (WSJ)
• Obama Controls Most of His Money as Republicans Have More (Bloomberg)
• Coeure Says Not Clear That Further ECB Interest-Rate Cut Needed (Bloomberg)
• France Seeks Labour Overhaul (WSJ)

• Nothing has changed and things have just gotten worse: Europe Banks Fail to Cut as Draghi Loans Defer Deleverage (Bloomberg)
• Mitt Romney secret video reveals views on Obama voters (BBC)
• Romney Stands by Government-Dependent ‘Victims’ Remark (Bloomberg)
• Video shows Libyans helping rescue U.S. ambassador after attack (Reuters)
• Fannie Mae paid BofA premium to transfer soured loans-regulator (Reuters)
• Northrop to shed nearly 600 jobs (LA Times)
• LOLmarkets: Retail Currency Traders Turn to Algorithms (WSJ)
• U.K. Royal Family Wins French Ruling on Kate Photos (Bloomberg)
• Nevada recluse dies with $200 in bank, $7 million in gold at home (LA Times)
• Gap Between Rich and Poor Grows in Germany (Spiegel)
• Chicago teachers meet Tuesday to decide whether to end strike (Reuters)
• Australia's Fortescue wins debt breather, shares soar (Reuters) ... a deal which ultimately will prime equity and unsecureds by $4.5 billion in secured debt
• Ford car sales fall 29% in Europe (FT)

• Anti-Japan demonstrators protest in New York City (China Daily) ...and the propaganda: Younger generation feels wave of emotions (CD)
• And the retaliation: Obama to launch auto trade case against China (Reuters)
• Spanish Banks Bleeding Cash Cloud Bailout Debate (Bloomberg)
• Chicago teachers extend strike (Reuters); Emanuel Promises He’ll Sue to End Chicago Teacher Strike (Bloomberg)
• China hurts own credibility with Xi's vanishing act (Reuters)
• European Squabbling on Euro Crisis Solution May Test Rally (Bloomberg)
• Two South Africa mines reopen, most don't (Reuters)
• Finance Industry Warns of ‘Cliff Effect’ in ECB’s Bond Plan (Bloomberg)
• China struggles to cure the violent ills of health system (Reuters)
• QE3 is for Main Street, except... it isn't: QE3 hit by mortgage processing delays (FT)
• Probe focuses on JPMorgan's monitoring of suspect transactions (Reuters)
• As explained here before: Spanish Bonds Decline as EU Policy Makers Clash on Bank Plan (Bloomberg)

• Weeks before U.S. election, Mideast gives Obama perfect storm (Reuters)
• Clashes intensify near US embassy in Cairo (Al Jazeera)
• Puppet governments in trouble: Mursi Risks Rift With U.S. or Voters as Islamists Rally (Bloomberg)
• Protests Put Egypt Relations on Edge (WSJ)
• Fed insists politics had no role in decision (FT)
• UBS "rogue trader" fraudulently gambled away $2.3 billion, court told (Reuters)
• Obama Holds Lead in Three Key States (WSJ)
• China's Xi recovering from bad back, could appear soon - sources (Reuters)
•  Japan voices anger over Chinese incursion after vessels entered waters around disputed Senkaku islands  (FT)
• Goldman Scales Back Junior-Analyst Program; No Contracts for College Hires (WSJ)
• China commentary slams Romney's "foolish" China-bashing (Reuters)
• Aging Baby Boomers Face Losing Care as Filipinos Go Home (Bloomberg)

• Italy Says It Won't Seek Aid (WSJ)... and neither will Spain, so no OMT activation, ever. So why buy bonds again?
• European Lenders Keep Ties to Iran (WSJ)
• Fink Belies Being Boring Telling Customers to Buy Stocks (Bloomberg)
• Dutch Voters Buck Euro Debt Crisis to Re-Elect Rutte as Premier (Bloomberg)
• China's Xi cited in state media as health rumors fly (Reuters)
• China vs Japan: Tokyo must come back 'from the brink' (China Daily)
• Manhattan Apartment Vacancy Rate Climbs After Rents Reach Record (Bloomberg)
• Well-to-do get mortgage help from Uncle Sam (Reuters)
• Princeton Endowment Expected to Rise Less Than 5% in Year (Bloomberg)
• Protesters Encircle U.S. Embassy in Yemen (WSJ)
• US groups step up sales of non-core units (FT)

• Germany Can Ratify ESM Fund With Conditions, Court Rules (Bloomberg)
• Obama Discusses Iran Nuclear Threat With Netanyahu (Bloomberg)
• Stocks, Euro Gain as Court Allows ESM; Irish Bonds Climb (Bloomberg)
• U.S. cautions Japan, China over escalating islands row (Reuters)
• Draghi alone cannot save the euro (FT)
• 'New York Post' Runs Boldest Anti-Obama Ad Yet (Bloomberg)
• Another urban legend: Fish Oil Pills Don’t Fix Heart Ills in 24-Year Data Review (Bloomberg)
• Troika Says Portugal’s Program is ‘On Track’ (Bloomberg)
• Russia Wants to Steer Clear of 'Gas War' (WSJ)
• U.S. Said Set to Target First Non-Bank Firms for Scrutiny (Bloomberg)
• Wen Says China’s Policy Strength Will Secure Growth Targets (Bloomberg)
• UK faces clash with Brussels on City (FT)

Watching Phil LeBlow providing Ford with a reacharound this morning reminded us of the total farce that is both the forest and the trees of the US auto industry. We have discussed the FUBAR channel-stuffing and the subprime-lending SNAFU but now, as Reuters reports, we see the ugly truth about GM's little baby "the Volt is over-engineered and over-priced". Nearly two years after the introduction of the path-breaking plug-in hybrid, GM is still losing as much as $49,000 on each Volt it builds. Furthermore, there are some Americans paying just $5,050 to drive around for two years in a vehicle that cost as much as $89,000 to produce. Of course, with seemingly unlimited Government backing the hope can continue, funded by the US taxpayer, as GM's Volt development chief admits "It's true, we're not making money yet," but the Volt will "eventually will make money. As the volume comes up and we get into the Gen 2 car, we're going to turn (the losses) around." Estimates on the cost to build a Volt range from $76,000 to $88,000, according to four industry consultants contacted by Reuters with one concluding: "I don't see how General Motors will ever get its money back on that vehicle."