Switzerland

US Industrial Production and the NY Fed Empire State Manufacturing survey are the two main releases for the US. In Europe, the euro area trade balance will be the notable print. Beyond today, US PPI, German ZEW and UK CPI are the main economic reports tomorrow. Wednesday will see the release of BOE’s meeting minutes, the US CPI, and the Euro area inflation report. On Thursday, President Obama will host Poroshenko and on the data front we have Philly Fed, initial claims, and building permits to watch out for, but the biggest market moving event will surely be the Scottish independence referendum. German PPI will be the key release on what will otherwise be a relatively quiet Friday.

Is the US dollar really strong now? We explain why your measuring stick can massively distort your perception away from the reality of facts and truth.

There is another "broad coalition" in The Middle East. With fighter from Sudan and Sweden to Spain and Switzerland, the following map shows where all the foreign fighters in Syria and Iraq's 'new crusades' are from...

Forget the Siren calls of the impending end of days and the imminent collapse of civilization.  Here is a non-polemical non-bombastic overview of three key events in the week ahead:  FOMC meeting, TLTRO launch in Europe and the Scottish referendum.  

Their backroom silence like a cancer grows................

As Scotland goes to the polls to decide on its own separation from the United Kingdom, the tone of the campaign is high on passion and secessionists are inching toward the magical 50 percent line. One core debate is whether Scotland is too small and too insignificant to go it alone... The answer, perhaps surprisingly, is resoundingly “Yes!” Scotland’s big enough to “survive” on its own, and indeed is very likely to become richer out of the secession. Nearer to the small-is-rich Ireland than the big-but-poor Britain left behind.

About a month ago we mocked the Albanian central bank when reports emerged that "two employees" had been charged with the theft of some $6.6 million in cash from the bank's vaults. Specifically, back in July the arrests come five weeks after a worker at the central bank admitted to stealing money over the course of four years, taking new bank notes printed in Switzerland when they arrived at his workplace and replacing them with old books. As it turns out, since there is a central bank involved, there is once again more than meets the eye, and the story has since mutated into something far more grotesque than even we could imagine, with news coming out late last week and over the weekend that not only was the theft by "two employees" a misdirection, but that the guilty party was none other than the Albanian version of Janet Yellen, the governor of the central bank himself Ardian Fullani.

“At This Point You Just Have to Laugh”. In every important respect, the Fed and the ECB and their brethren are no longer central banks at all. They are Ministries of Markets, no different from a Ministry of Industry or – even more eerily similar – the Ministry of Culture you would find in most European governments. At this point the Narrative hegemony is complete. There’s no longer even a cursory bow to the idea that fundamentals matter. So I’m calling a top. Not a top in markets, because I honestly have no idea what’s going to happen next. But I’m calling a top in the Narrative of Central Bank Omnipotence because it has, in fact, reached its asymptotic limit of influence and belief.

One of the more amusing comments overnight came from Bank of America, which now predicts that China's export growth will be boosted by iPhone 6 by 1% per month through year-end. Whether or not this is accurate is irrelevant, but we are happy that unlike before, BofA has finally figured out that iPhone sales are positive for Chinese GDP, not US, which was the case with the release of the iPhone 4 and 5, when clueless strategists all came out boosting their US (!) GDP forecasts on the iPhone release. We note this because the long-awaited release of Apple's new iPhone will certainly grab some attention tomorrow. According to a BofA poll last week and of the 124 respondents surveyed, 66% of those have noted that they are going to buy the new iPhone and of those planning to buy 75% of those will be replacing their iPhone 5/5s.

It appears there is another nation on planet Earth that is becoming isolated. One by one, Russia and China appear to be finding allies willing to 'de-dollarize'; and the latest to join this trend is serial-defaulter Argentina. As Reuters reports, China and Argentina's central banks have agreed a multi-billion dollar currency swap operation "to bolster Argentina's foreign reserves" or "pay for Chinese imports with Yuan," as Argentina's USD reserves dwindle. In addition, Argentina claims China supports the nation's plans in the defaulted bondholder dispute.

Canada is seen as the new banking safe haven and an “island of safety and stability” because of its perceived sound fiscal position, commodity wealth and solid economic performance. Now, anytime we see central bankers slapping each other on the back, we're going to be skeptical. As it turns out, Banque du Canada is actually the most pitifully capitalized central bank in the western world. They’re in such bad shape they actually make the Fed look healthy. Hong Kong’s Monetary Authority Exchange Fund is a good example of a strong balance sheet; their latest figures as of 30 June show a whopping capital reserve equal to nearly 22% of total assets. This is a massive margin of safety for the central bank. The US Federal Reserve, on the other hand, shows a capital reserve of just 1.27%. And Canada? A tiny 0.47%... as in less than one half of one percent. This isn’t safety and stability. It’s a rounding error.

Zero inflation is like death penalty to debt-laden countries. It has been estimated that Italy would need a primary surplus of ~8% if it wanted to stabilize its debt/GDP at zero inflation, which means just stopping it from moving even higher. Spain would need a primary surplus of 2%+, instead of current negative 1.44%. Which means more austerity and more contractionary policies, to cause more internal devaluation than it is currently the case, more declines in unit labor costs, more salary cuts, more unemployment, less consumer spending, less corporate investments.... Incidentally, we have for European assets and the ECB the same feeling we have for Japan and the BoJ. Abenomics has a high chance of failure, in the long term. Nevertheless, on the road to perdition, chances are that efforts will be stepped up and more bullets shot in an attempt to avert the end game. As stakes are raised, financial assets will be supported and melt-up in bubble territory, doing so at the expenses of a more turbulent end-game in the years ahead.

The chance of EURCHF breaking the peg at 1.2000 have increased from 10% to 25-30% based on European Central Bank monetary policy, geopolitical risk and a lack of policy choices for the Swiss National Bank. This means that being long EURCHF no longer is a safe bet and although the 70% chance of the floor being both defended and protected is still high, the tail-risk involved is becoming too concerning.

Nowhere was the humor of central planning better exhibited than in Brazil was a clear outperformer with the BOVESPA (+10%) posting its best monthly performance since January 2012. Why? Because Brazil just entered a recession. Perhaps the reason why the joke that global thermonuclear war will send futures limit up is funny, is because it's true...

The US may be closed on Monday, but after a summer lull that has seen trading volumes plunge to CYNKian lows, activity is set to come back with a bang (if only for the sake of banks' flow desk revenue) with both a key ECB decision due later this week, as well as the August Nonfarm Payrolls print set for Friday. Among the other events, in the US we have the ISM manufacturing on Tuesday, with markets expecting a broadly unchanged reading of 57.0 for August although prices paid are expecting to decline modestly. Then it is ADP on Thursday (a day later than usual) ahead of Payrolls Friday. The Payrolls print is again one of those "most important ever" number since it comes ahead of the the September 16-17 FOMC meeting and on the heels of the moderation of several key data series (retail sales, personal consumption, inflation). Consensus expects a +225K number and this time it is unclear if a big miss will be great news for stocks or finally bad, as 5 years into ZIRP the US economy should be roaring on all cylinders and not sputtering every other month invoking "hopes" of even more central bank intervention.