Reuters

When passing rising labor costs on to consumers isn’t an option, it’s the supply chain that suffers and now, in a frantic attempt to extract every last penny of savings in order to offset the cost of paying hundreds of thousands of workers $9/hour versus $8, Wal-Mart is effectively demanding price cuts from anyone with a connection to China in the wake of Beijing’s move to devalue the yuan.

It just keeps getting worse, and worse, and worse...

Palladium surged 6% yesterday. The move appeared to be a short squeeze and may be the precursor for the long awaited move higher in gold and silver.

• Stocks slip for fifth straight day, euro holds steady (Reuters)
• VW recall letters in April warned of an emissions glitch (Reuters)
• VW Cheating Scandal Threatens to Ensnare BMW as Probe Widens (BBG)
• Pope Francis set to address fractious U.S. Congress (Reuters)
• Norway Cuts Rates to Record Low to Save Economy From Oil Slump (BBG)
• Taiwan Cuts Rate for First Time Since 2009 as Exports Falter (BBG)
• Janet Yellen to speak at UMass on Thursday (Daily Collegian)
• A Big Bet That China’s Currency Will Devalue Further (NYT)
• Debt Relief for Students Snarls Market for Their Loans (WSJ)

With the new car bubble peaking, and the world's automakers having ramped up production across the globe after seeing Fed-driven signals that all is well and all is going to get better, the slowdown in China already has many hitting the panic button (with production plunging, capacity utilization tumbling, and workweeks tumbling). With this week's 'exogenous' diesel-defect 'event', the inventory-problem that US automakers are facing is nothing compared to the potentially catacylysmic wave of deflationary pricing (and deflationary lack of demand for raw materials) that VW faces with its record inventory.

According to Interfax, Russia may deploy Iskander ballistic missiles to its enclave of Kaliningrad should the US go ahead with plans to send 20 nukes to Germany.

As tipped last month, the IAEA is allowing Iran to self-police the sample collecting process at a controversial military installation. Although inspectors and Iranian officials give conflicting accounts, what's clear is that Tehran is not at all prepared to accept a situation that causes the Rouhani government to lose credibility with the Iranian public. Expect GOP lawmakers (not to mention presidential candidates) to hold this up as yet another example of why the deal is likely to blow up (figuratively speaking we hope) in the face of the Obama administration.

Newly-upgraded Portugal unleashed a budget bombsell on Wednesday when it revised its 2014 deficit higher by some 60% after a failure to liquidate the predecessor to bailed out Banco Espirito Santo left taxpayers holding a €5 billion bag. 

The last time September Retail Sales growth was this weak was 2009, limping aimlessly out of the 'Great Recession'. With a mere 0.9% year-over-year growth, Johnson-Redbook data seems to confirm what Reuters reports is looming - the weakest U.S. holiday sales season for retailers since the recession. Consultancy firm AlixPartners expects sales to grow 2.8-3.4% during the November-December shopping period compared with 4.4% in 2014, based on analyzing consumer spending trends so far this year, noting (myth-busting for permabulls) dollars saved at the pump are being directed to personal savings or on non-retail activities.

Our freedom and prosperity ends when we adopt the counterparty theft of central bank’s monopoly money.

• Global Stocks Steady Despite China Slowdown (WSJ)
• European Recovery Saves Markets From China Gloom as Stocks Rally (BBG)
• Pope starts U.S. trip with tone of conciliation (Reuters)
• FBI Said to Recover Personal E-Mails From Hillary Clinton Server (BBG)
• Volkswagen chief faces grilling by board over diesel scandal (Reuters)
• 'European Detroit' Fear Grips VW Company Town as Scandal Widens (BBG)
• Berlin finds itself caught up in Volkswagen scandal (FT)

In the aftermath of Yellen's "hung hold" decision, which left the world confused if the economy is getting better or worse, global equity markets proceeded to take both Europe and Japan to task, trying to push one of the last two remaining central banks to boost their QE. And until this morning it was unclear who was going to take the lead. Then, following comments over the past several hours from ECB governing council members Ewald Nowotny and Bostjan Jazbec, as well as a well-directed leak via Market News, we got confirmation that anyone hoping for Mario Draghi to blink first may be disappointed this time around.

With the SEC moving to head off the risk of a bond market meltdown triggered by a dangerous combination of illiquidity and bond fund proliferation, WSJ decided to see which fund providers are the most at risk in a crisis. The list may surprise you...

Hot on the heels of British military threats of a coup, the potential for a truly 'red' black swan of an event has reared its ugly head in China, just as Xi tours America. As Reuters reports, bitterness is growing within China's armed forces to President Xi Jinping's decision to cut troop numbers by 300,000, and, according to a source and commentaries in the military's newspaper, considerable effort will be needed to overcome opposition to the order with PLA official sources warning "people are worried, it's been too sudden."