Sometimes you just have to stand in awe at the level of corruption and incompetence in government.
- Belgian Police 'Arrest' Public Enemy No.1 (Sky News)
- France Widens Crackdown at Home as Bombs Rain on Islamic State (BBG)
- Putin Goes From G-20 Pariah to Player at Obama Turkey Talk (BBG)
- Paris Attacks: 150 Raids as France Goes to 'War With Terrorism' (NBC)
- 'Rocket Launcher Found' In French Police Raids (Sky)
- Geopolitical worries lift oil after Paris attacks, but glut weighs (Reuters)
- Japan's economy falls back into recession again (BBC)
- S&P 500 Futures Slip as Aussie Gains on Rate Outlook; Oil Rises (BBG)
- Xi Says China Needs at Least 6.5% Growth in Next Five Years (BBG)
- Ben Carson Vaults to Lead in Latest Journal/NBC Poll (WSJ)
- World's Biggest Banks Still Not `Truly Resolvable,' FSB Says (BBG)
- Keystone XL's builder faced darkening prospects (Reuters)
- Merkel Says Germany Must Step Up World Role in Refugee Crisis (BBG)
Financial engineering scams like Tyco and Valeant would never happen in an honest free market. Short sellers would shut them down long before they reach egregious levels of over-valuation; and the cost of honest downside market insurance (i.e. S&P 500 puts) and market driven carry cost would dramatically reduce the profitability of speculation and the amount of punters and capital in the casino. In today’s broken markets and corrupt regime of central bank driven crony capitalism, however, bubbles inflate in individual securities, as well as in broad sectors and the market as a whole, until they reach egregious, self-correcting extremes. Then they violently implode, creating immense waves of collateral damage in the process. Perhaps then the American people will learn that Yellen & Co have actually been in the un-wealth effects business for way too long.
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.
In the absence of any key economic developments in the Asian trading session, Asian stocks traded mostly under the influence of the late, pre-opex US ramp momentum courtesy of another day of ugly economic data in the US (bad econ news is good news for liquidity addicts), closing solidly in the green across the board, led by China (+1.6%) and Japan (+1.1%) thanks in no small part to the latest tumble in the Yen carry trade, which mirrored a bout of USD overnight weakness. And since a major part of the risk on move yesterday was due to Ewald Nowotny's comments welcoming more QE, news from Eurostat that Eurozone CPI in September dropped -0.1% confirming Europe's deflation continues, should only be greeted with even more buying as it suggests further easing by the ECB is inevitable.
While the US bond market, if not equities, is enjoying the day off on a day in which there is no economic data just more Fed speakers including the Fed's Evans who on Friday uttered what may be the dumbest thing a central planner has ever said, the week's macro docket starts in earnest on Tuesday when China releases much anticipated September trade data. Here are the key events for the rest of the week.
- Asian shares rise on fading Fed rate views (Reuters)
- U.S. Equity Futures Fall, Risking S&P 500 Rally as Copper Slides (BBG)
- More biotech pain, this time from the WSJ: For Prescription Drug Makers, Price Increases Drive Revenue (WSJ)
- VW Will Delay or Cancel Non-Essential Investments Due to Scandal (BBG)
- Russia Rejects No-Fly Zone Over Syria as Clerics Urge Reprisals (BBG)
- Historic Pacific trade deal faces skeptics in U.S. Congress (Reuters)
- German Factory Orders Unexpectedly Fall Amid Economic Risks (BBG)
News That Matters
- MOAR: Euro-Area Growth Seen Slowing in Sign More Stimulus May Be Ahead (BBG)
- MOAR: Japan's wage growth slows in August, keeping pressure on BOJ for more stimulus (Reuters)
- MOAR: Stocks, Copper, Emerging Markets Jump as Fed Delay on Rates Seen (BBG)
- And yet... Central Banks Lose Bond-Market Credibility as Woes Mount (BBG)
- World Bank cuts Asia growth forecast on China and US rates (BBC)
The US Federal Reserve orchestrated an artificial boom from 2001 to 2007 through artificially low interest rates and has resumed doing so once again. Entrepreneurs operating under faulty market signals created by the Federal Reserve malinvested hundreds of billions of dollars into capital intensive projects primarily in the housing sector. We paid for our boom with millions of destroyed jobs, wasted labor, and wasted resources. The Chinese Central Bank learned nothing from the Fed’s catastrophic experiment. They will reap the same rewards.
- Commodities in crisis as Asian shares tumble and shipper files for bankruptcy (Reuters)
- Global Rout Eases as S&P 500 Futures Advance With Oil, Glencore (BBG)
- Chinese Stocks Decline Most in a Month in Hong Kong on Economy (BBG)
- India cuts interest rates by more than expected (BBC)
- Glencore Rebounds as $50 Billion Plunge Is Seen as Excessive (BBG)
- How Congress May Have Saved Goldman Sachs From Itself (BBG)
“American exceptionalism has to be driven out of our curriculums. We’re not under threat. We are the threat.”
- Contrarian CEOs tell the Fed: Go ahead, raise my rates (Reuters)
- Goldman Warns Markets Unprepared for Fed as Treasuries Seesaw (BBG)
- Investors Look Beyond Fed Meeting, See Low Rates (WSJ)
- Volatility seen lingering no matter what the Fed does (Reuters)
- What Rising Interest Rates Would Mean for You (BBG)
- China Stocks Jump in Last Hour of Trading on State Support Signs (BBG)
- No Escape for China Hedge Funds Overwhelmed by Stocks Crash (BBG)
- Hedge Fund Bridgewater Defends Its ‘Risk-Parity’ Strategy (WSJ)