Greece

Non-bombasitc overview of the investment climate.  No, the sky is not falling.  This is not the end of days.  

The Fed is truly cornered. If it fails to hike rates it will have no ammo for when the next crisis hits the US. But it if hikes rates now while the economy is so weak (more on this in a moment), it’s likely to kick off or deepen a recession.

Don't look now but Greece (remember them?) is headed back to the polls on Sunday in an election that pits a watered down version of Alex Tsipras and Syriza against the conservative New Democracy. With Syriza's original vision relegated to the realm of "wishful thinking", Greeks face a choice that really is no choice at all.

• The bearish dovish Fed: Shares Fall After Federal Reserve Keeps Rates on Hold (WSJ)
• Developed, emerging markets diverge as Fed keeps rates steady (Reuters)
• Yellen May Emulate Taper Template and Raise Rates in December (BBG)
• Russia Raises Prospect of Sending Troops Into Combat in Syria (BBG)
• Rigged markets 1: U.S. Said to Investigate Chicago Trader as Spoof Probes Broaden (BBG)
• Rigged markets 2: Primary Dealers Rigged Treasury Auctions, Investor Lawsuit Says (BBG)
• Rigged markets 3: The Man Who Took KKR’s Stock for a Ride (WSJ)

Today, most of the developing world, tomorrow most of the developed world. Today Ukraine, Syria, South Africa and Brazil. Tomorrow Ireland, Greece, the UK, the EU, other Middle Eastern and African nations and the U.S. (see important charts) 

Almost two weeks after we explained why any hope for a QQE boost by the BOJ is a myth, and that any increase in monetization will simply lead to a faster tapering and ultimately halt of Kuroda's bond purchases the market finally grasped this, when overnight the BOJ not only did not easy further as some - certainly the USDJPY - had expected, but kept its QE at the JPY80 trillion level and failed to offer any hints of further easing that many had hoped for, pushing the Nikkei down from up almost 400 point intraday to virtually unchanged and sending the USDJPY back under 120. JGBs also traded lower on concerns there may not be much more QE to frontrun.

Everything is so wonderful that a rate hike would equate to saying the Fed has won. Seven years of ZIRP and a few selling periods when the Fed stopped POMO’s and QE injections, we can easily say with extreme confidence that the Fed won. And by won we mean didn’t ruin the system entirely. Except they did.

Europe's refugee crisis is getting worse by the day. Less than 24 hours after Germany announced it would impose border controls with Austria, followed promptly by the Czech Republic, Slovenia and now the Netherlands, German vice chancellor Sigmar Gabriel predicted that as many as 1 million refugees may arrive by the end of the year as other nations moved to fortify their frontiers. In the meantime, however, Europe is dramatically escalating measures to halt the influx and as AFP reported earlier today, the European Union has now approved military action against human traffickers in the Mediterranean Sea.

News That Matters

We Americans are in something approaching complete denial about how truly horrible our nation’s recent impact on the rest of the world has been. We are universally hated, even by those who have their hands out to receive their Danegeld, and the world is undoubtedly shaking its head as it listens to the bile coming out of the mouths of our presidential candidates. Shakespeare observed that the “evil that men do lives after them,” but he had no experience of the United States.

None other than Europe's master state, Germany itself, is about to launch an ICBM at Schengen when, as BBC reports, "Germany is to reintroduce some form of controls on its border with Austria to cope with the influx of migrants, German and Austrian media report." While the BBC said that it is not clear what measures would be introduced, it is likely that a full return to the pre-Schengen era, with extensive customs checks of every border crosser is imminent. Not only that but Express reported that the "German Defence Minister has admitted that the country verges on "an emergency" after cracks have begun to emerge in the 'German generosity' and that some 4000 German troops have been put on standby.

- Bail-ins, withdrawal limits and negative interest rates may be imposed - FT proposes a ban on “barbarous relic” cash - Central banks and banks would have citizen's wealth and people themselves “completely under their control” ...

"All this points to weaknesses in domestic and international policy arrangements - arrangements that have so far been unable to constrain sufficiently the build-up and unwinding of hugely damaging financial booms and busts across countries.Hence a world in which debt levels are too high, productivity growth too weak and financial risks too threatening. This is also a world in which interest rates have been extraordinarily low for exceptionally long and in which financial markets have worryingly come to depend on central banks' every word and deed, in turn complicating the needed policy normalisation. It is unrealistic and dangerous to expect that monetary policy can cure all the global economy's ills."

"The story that (Aylan's father) told is untrue. I don't know what made him lie, maybe fear. He was the one driving the boat right from the start. When they set off five minutes in he was looking left and right, worried, then he was speeding. Even his wife was screaming at him to slow down." Iraq-based Zainab Abbas, via her Sydney-based cousin Lara Tahseen, told Ten News she paid $10,000 for the voyage.

"You can’t talk for months about how to stabilize the situation and then take a decision that puts Ukraine and Slovakia into an unenviable situation."