Reuters

As Rousseff fights to keep the Presidency, and has the speaker of the House battles to have her impeached, the country's economy continues to crumble. Retail sales came in below expectations for August and as Bloomberg reports, Brazil's top bankers now fear the combination of overindebted households and soaring unemployment could spell doom.

Earlier today the largest U.S. mortgage lender Wells Fargo reported results that beat expectations by the smallest possible increment. What caught our attention, however, was the fuel that keeps Wells Fargo's engine humming: mortgage applications. Unfortunately for the housing bulls, there was no good news here because after rushing higher in early 2015 on the latest false hope of an economic recovery or due to fears rates are rising, Wells' mortgage applications and the associated pipeline have declined ever since.

"The big battle preparations in that area are clear. There is a large mobilization of the Syrian army ... elite Hezbollah fighters, and thousands of Iranians who arrived in stages in recent days."

Capital Economics "expects gold could hit $1,200 before the end of this year, rising to $1,400 by the end of 2016”

• Democratic rivals back Clinton on emails, but little else in scrappy debate (Reuters)
• Hillary Clinton Shows Relentless Efficiency in First Democratic Debate (WSJ)
• U.S. Examines Goldman Sachs Role in 1MDB Transactions (WSJ)
• JPMorgan Says Trading Pain Isn't Over After Third-Quarter Slump (BBG)
• Islamic State battles insurgents near Aleppo as army prepares assault (Reuters)
• Oil Slide Means `Almost Everything' for Sale as Deals Accelerate (BBG)

Two weeks ago, using Macquarie data, we found something disturbing at China's micro level: a quarter of Chinese firms with debt are unable to cover their annual interest expense currently. Over the weekend, Hong-Kong based CLSA decided to take this micro-level data and look at it from the top-down. What it found was stunning. According to CLSA estimates, Chinese banks' bad debts ratio could be as high 8.1% a whopping 6 times higher than the official 1.5% NPL level reported by China's banking regulator!

• Playboy to Drop Nudity as Internet Fills Demand (NYT)
• Stock futures fall on weak China trade data (Reuters)
• Any Hall is down 20% YTD (WSJ)
• Global Stocks Slide With Metals After Chinese Imports Tumble (BBG)
• Clinton's tack to the left to be on display in Democratic debate (Reuters)
• Switzerland Said to Impose 5% Leverage Ratio on Big Banks (BBG)
• AB InBev, SABMiller brew up $100 billion deal (Reuters)

Marc Faber is an eloquent advocate of owning physical gold which he describes as being a way to become “your own central bank.”  He believes an allocation to physical gold will serve as vital financial insurance and that Singapore is the safest place to own gold in the world today.

For the past two weeks, the thinking probably went that if only the biggest short squeeze in history and the most "whiplashy" move since 2009 sends stocks high enough, the global economy will forget it is grinding toward recession with each passing day (and that the Fed are just looking for a 2-handle on the S&P and a 1-handle on the VIX before resuming with the rate hike rhetoric). Unfortunately, that's not how it worked out, and overnight we got abysmal economic data first from China, whose imports imploded, then the UK, which posted its first deflation CPI print since April, and finally from Germany, where the ZEW expectation surve tumbled from 12.1 to barely positive, printing at just 1.9 far below the 6.5 expected.

PBOC strengthens Yuan by most since Nov 2014

The message from China was heard loud and clear from the IMF meetings in Lima: The United States [Fed] "should assume its global responsibilities" given the dollar's status as reserve currency; "now is not the time to raise rates."

Wwith oil volatility surging in recent months, oil producers needed to take advantage of a rally, technical or otherwise, and an oil vol lull to reestablish hedges, even if it meant at far lower prices than recent benchmarks.  This is precisely what happened in the past week following one of the most torrid surges in the price of oil seen in recent years.

"There were too many wounded, tens of dead, body pieces scattered around, and people screaming. The state wasn’t able to prevent a massacre right in the middle of Ankara. Instead, it enabled it."

Last week, we said the following about the next stage of Syria’s civil war: “In case it wasn’t clear enough what was set to happen soon after the Russian air force had spent a few days softening up anti-regime positions on the ground, allow us to spell it out: with the opposition on the run thanks to days of aerial bombardment, Iran will now send in the Hezbollah/Shiite militia/Quds clean up crew, who will personally ensure that whoever is left in the wake of the Su-34 strikes is swiftly eliminated at close range." As Retuers reports, that is exactly what's unfolding.

“Tis the part of the wise man to keep himself today for tomorrow, and not venture all his eggs in one basket” - Cervantes in Don Quixote in 1605

The key to successful long term investing is diversification and owning a range of different quality assets.

Gold has been shown to enhance returns and to reduce overall volatility over the long term. This was clearly seen during the financial crisis when gold was one of the very few assets to surge in value.