Once again, the two major macroeconomic announcements over the weekend came from China, where we first saw an unexpected, if still to be confirmed, increase in FX reserves, and then Chinese trade data once again disappointed tumbling by 6.9% while imports plunged 18.8%. So how did the market react? The Shanghai Composite Index rose for a fourth day and reached its highest since August 20because more bad data means more easing from the PBOC, and just to give what few investors are left the green light to come back into the pool, overnight Chinese brokers soared after Chinese IPOs returned after a 5 month hiatus. Elsewhere, Stocks and currencies in emerging markets slump on prospect of higher U.S. borrowing costs before year-end and after data underscored slowdown in Asia’s biggest economy. Euro strengthens.
Perhaps realizing that another wave of social unrest and failure to obtain creditor cash may well lead to a violent social upheaval, Tsipras seems to be contemplating a Plan B, one which would see Greece accept thousands of refugees destined for Europe in exchange for getting the earmarked cash without any reform.
In case you have been hibernating, the European Union (EU) is already in a complete state of disarray. Everywhere you look - economy, politics, security, society, demographics - there are very serious problems with no credible solution in sight. This does not bode well for the future of the EU, starting with those who will be living in it. The EU doesn't need any nationalists to destroy its future prospects. It’s doing absolutely fine on its own.
Forget anything you might read about “brutal dictators” that need to go or the importance of “democracy” to the region. That's dumbed-down pablum for the masses and has literally nothing to do with the motivations of the (clinically insane) external power brokers actually driving the events on the ground and crafting the narrative that is faithfully scribed and re-told by the media. In fact, disturbingly often, the scribed narrative is exactly opposite of the truth.
If the PKK steps up its attacks on the Erdogan regime, how will Ankara reconcile that with Washington's move to place ground troops with the group's Syrian sister organization and what will that mean for two air forces that are flying from the same base at Incirlik?
If Americans Only Knew ...
Ahead of US spec ops deployment in Syria, the US is sending F-15C Eagle twin-engine fighters to Turkey, suggesting The Pentagon is preparing for aerial combat with the Russian air force.
Following farcical elections which saw President Tayyip Erdogan get the outcome he needed in order to press forward with a move to rewrite the constitution on the way to consolidating his power, Ankara's crackdown on the press continues as the government is now jailing opposition reporters and accusing them of attempting to orchestrate a "coup."
"Yesterday we held five funerals, but there are still 55 bodies at the morgue," exclaims Lesbos' mayor Spyros Galinos, adding "Who could have anticipated such a carnage in the Aegean?"
There are a multitude of fuses affixed to dozens of powderkegs and little kids with matches are on the loose.
People are genetically biased against change, because change means potential danger. People are also genetically biased against acknowledging this bias, because they wish to see themselves as being able to cope with both change and danger. Put together, this means that when changes come, people are largely unprepared or underprepared. This little bit of psychology 101 may seem redundant, but it is indispensable if we wish it to recognize the implications of Europe -and the entire world with it, in its slipstream- having already entered a period of change so profound it is impossible to predict what the impact will be. This ignorance and denial threatens to lead to a needless increase in nationalism, fascism, violence, misery, death and warfare. If we were to acknowledge that the change is inevitable, and prepare ourselves accordingly, much of this could be avoided.
"There's no point in other countries getting together and deciding about a system of government and the head of that state. This is a dangerous innovation which no government in the world would accept being imposed on itself. The solution to Syria's problem is elections."
The torrid October, with its historic S&P500 point rally, is finally in the history books, and at least for a select group of hedge funds such as Glenview, Pershing Square and Greenlight and certainly their L.P.s, a very scary Halloween couldn't come fast enough, leading to losses between 15% and 20%. How did everyone else fare? Below, courtesy of Deutsche Bank's Jim Reid, is a summary of what worked in October (and YTD), and what didn't.