European, Asian stocks fell while S&P futures rebounded as investors assessed a mixed batch of earnings reports while the dollar strengthened to 9 month highs versus most of peers on rising confidence that the Fed will raise rates this year, pushing global bond yields higher.
Looking at the week ahead, the US election enters the home stretch and politics will likely dominate the headlines, especially the closer races in Congress. Despite data being overshadowed by politics, there are some key US releases coming up, with the first estimate of Q3 GDP, the employment cost index and durable goods the main focus.
Global stocks jumped around the globe, with Europe's Stoxx 600 and US equity futures rising more than 0.5% on a surge in merger announcements over the weekend including the $85 billion mega takeout of AT&T for Time Warner, the $6.4 billion acquisition of B/E Aerospace by Rockwell Collins, the $2.7 billion deal targeting Genworth by China Oceanwide and the just announced $4 billion purchase of Scotttrade by Ameritrade.
The near-zero interest rates favor short-term production schedules with minimal capital requirements, resulting in low-risk production lines of cheap goods. That’s why we have “pound- shops” and 99p shops and all the other shabby outlets that now litter every suburban high street - creating the illusion of zero inflation.
Thousands of people recently demonstrated in Brussels against free trade deals negotiated by the EU. This happened just days before a meeting of EU trade ministers in Bratislava last month, which was considered the last push to salvage the Transatlantic Trade and Investment Partnership (TTIP) between the EU and the United States. Not only is Europe divided on the deal, but the talks have been extremely secretive.
In a surprising reminder how the European central bank feels about bitcoin and other virtual money, the ECB urged EU lawmakers to tighten proposed new rules on digital currencies such as bitcoin, fearing they might one day weaken its own control over money supply in the euro zone.In other words, first the ECB went after cash; now it is going after all virtual currencies like bitcoin.
"From a growth rate perspective, the speed of credit expansion is alarming. The current pace of credit growth in China is realistically in a range between 19% and 20%, well above the reported official TSF growth of 12.4% and new loan growth of 13.0% in September. Relative to GDP, China’s credit-to-GDP ratio currently in a range from 260% to 275% of GDP as of September 2016" - Barclays
The abolition of cash implies the removal of money and hence the destruction of the division of labor and the market economy. It is likely that rather than promoting economic growth, abolishing cash to permit the central banks to lower interest rates into deeper negative territory will lead to the destruction of the market economy and promote massive economic impoverishment.
In short, the U.S. economy may never reach “escape velocity” unless it is first allowed to crash. It has been too larded up and larded over with debt for any real sustainable growth to take root. More evidence, to this effect, was revealed this week.
Trigger Warning: The following article includes an abundance of insults and harsh words directed at individuals of both of the male and female sex as well as politically incorrect statements including digs at cross-dressers and people worried about the weather. If you feel “triggered” by any of the statements, please see a psychiatrist.