We suspect the market will be disappointed by this morning's headlines from China. Chinese rate markets are implying a RRR cut is coming soon (as swap rates drop below deposit rates - previously signaled 2 RRR cuts) but the PBOC announced this morning a muich more focused injection of cash to 20 of the nations' largest banks. RRR cuts, are (theoretically) considerably more broadly stimulative to lending than a $32.8 billion cash injection to banks - which are struggling to lend as demand for loans (given high costs of debt for the firms that need the money the most) is weak. One can only imagine the holes in bank balance sheets that exist if the PBOC is forced to do this. Simply put, no matter how much hope there is, as we noted previously, the PBOC will not be providing broad stimulus.
- Obama open to appointing Ebola 'czar', opposes travel ban (Reuters)
- Schools Close as Nurse’s Ebola Infection Ignites Concern (BBG)
- How the World's Top Health Body Allowed Ebola to Spiral Out of Control (BBG)
- European Stocks Rise Amid Growing Pressure for Stimulus (BBG)
- Putin Threatens EU Gas Squeeze Raising Stakes for Ukraine (BBG)
- ECB to Start Asset Purchases Within Days, Says Central Banker Coeuré (WSJ)
- Investors search for signs of end to stock market correction (Reuters)
From Bitcoin to the Swiss gold referendum, and from Chinese trade and North Korean leadership, Jim Rogers covers a lot of ground in this excellent interview with Boom-Bust's Erin Ade. Rogers reflects on the end of the US bull market. citing a number of factors from breadth to the end of QE, adding that he agrees with Albert Edwards' perspective that now is the time to "sell everything and run for your lives," as the "consequences of [The Fed] are now being felt." Most notably though, Rogers believes the de-dollarization is here to stay as Western sanctions force many nations to find alternatives. Simply put, Rogers concludes, "we are all going to pay a terrible price for all this money-printing and debt."
- M&A Bubble is bursting: AbbVie Says It Reconsiders Merger Pact With Shire (WSJ)
- Winner of bad headline timing award: Spinoffs Could Set Stage for Next Merger Wave (BBG) - and now wait for the spinoffs getting pulled
- Record mortgage settlement pushes Bank of America into third-quarter loss (Reuters)
- Korea joins the Japan currency war: Bank of Korea Cuts Base Rate (WSJ)
- Double Irish’s Slow Death Leaves Google Executives Calm (BBG)
- Global Oil Glut Sends Prices Plunging (WSJ)
- Slow Rise in Prices Shows China’s Economy Is Still Struggling (WSJ)
With this in mind we hope the Swiss people display their fierce independence and reject the advice of the "experts," many of whom got us into this mess, in favour of the policies that have kept them peaceful and prosperous for centuries ...
- No Happy Ending for Investors in Central Bank Fairy Tale (BBG)
- Ebola Response Strains Hospitals (WSJ)
- Obama, foreign military chiefs, to thrash out Islamic State plans (Reuters)
- Draghi’s ‘Whatever It Takes’ Plan on Trial at EU Court (BBG)
- Too-Big-to-Fail Banks Face Up to $870 Billion Capital Gap (BBG)
- Iran’s Message to World: You Need Us to Fight Islamists (BBG)
- Facing new oil glut, Saudis avoid 1980s mistakes to halt price slide (Reuters)
- Ukraine Grannies Outprice Banks on Hryvnia Black Market (BBG)
- HK police use sledgehammers, chainsaws to clear protest barriers, open road (Reuters)
- Gazprom Quarterly Net Rises 13%, Misses Estimate on Ukraine Debt (BBG)
While some are focused on the demise of the dollar, the fact is that it has been appreciating and this is causing some confusion. See if this helps clarify what is happening.
While Russia's economy is hurting, desperate to overthrow the tentacles of the Petrodollar, and is urgently pivoting toward Beijing, the cherry on top came moments ago when, as if to assure all involved parties that there will be enough capital support on both sides, the PBOC released a surprising announcement that the central banks of China and Russia signed a 3-year, 150 billion yuan bilateral local-currency swap deal today, according to a statement posted on PBOC website. Deal can be expanded if both parties agree, statement says. Deal aims to make bilateral trade and direct investment more convenient and promote economic development in 2 nations.
- Privately, Saudis tell oil market: get used to lower prices (Reuters)
- OPEC Members’ Rift Deepens Amid Falling Oil Prices (WSJ)
- Russia Spending $6 Billion Not Enough to Stop Ruble Rout on Oil (BBG)
- Deutsche clampdown on bad behaviour prompts exodus of traders (FT)
- Can't beat the spin: China trade data eases slowdown fears, more stimulus may still be needed (Reuters)
- China’s Exports Buoy Growth as IPhone Inflates Imports (BBG)
- Italy on Sale to Chinese Investors as Recession Bites (BBG)
- Hong Kong Protesters, Antiprotest Activists Clash (WSJ)
- Turkey Offers Military Bases to U.S.-Led Coalition (BBG) ... and the price is a small piece of post-Assad Syria
- Passenger With Flu-Like Symptoms Causes Ebola Scare At LAX (CBS)
- Boston patient deemed unlikely to have Ebola virus (Boston Globe)
What if there was some degrees of freedom in the centrally planned capital markets that rational, non-emotional and non-ideologically-laden thinking could shed light on ? Here is such an attempt
- It wasn't Obama this time: Pakistani teen, Indian activist win Nobel Peace Prize (Reuters)
- Surging VIX Shakes Bulls as S&P 500 Charts Go Haywire (BBG)
- Global shares hit six-month low as growth worries mount (Reuters)
- Police, protesters clash in St. Louis ahead of weekend of rallies (Reuters)
- We're Sitting on 10 Billion Barrels of Oil! OK, Two (BBG)
- Spain seeks answers as seven more enter Ebola isolation (Reuters)
- Iran will sell its oil to Asia in November at the biggest discount (BBG)
- Redefining honeypot: U.S. DEA 'most interested' in U.S. investors in Canadian marijuana firms (Reuters)
- UKIP Wins First Commons District With Conservative Defector (BBG)
- Fake Ebola Patients Help Hospitals Prepare for Next Case (BBG)
Foxconn workers are striking again - this time in Chongqing. But you have to look at the map to see why this is an event of extraordinary significance. In a word, these strikes mean that the rice paddies of China have been nearly drained of cheap, docile labor.
- Five U.S. airports to screen for fever (Reuters)
- Danger, central banks trading with each other: Bipolar U.S. Stocks See Biggest Mood Swing in Three Years (BBG)
- Draghi Policies Blunted in Berlin as German Protests Grow (BBG)
- White policeman kills black teen in St Louis, triggering fresh protests (Reuters)
- Au Revoir to France’s Welfare Model as Socialists Cut Spending (BBG)
- Here comes Roberto Cavalski (Reuters)
- There are 49 U.S. venture-capital-backed companies with a valuation of $1 billion or more—the highest number on record (WSJ)
- Pressure mounts on Hong Kong leader over payout amid crisis (Reuters)
For the US, it’s now shooting fish in a barrel – but just for now. The three-pronged plan the Fed has started to execute is plain for everyone to see... And it will have the rest of the world begging for mercy.
The Council on Foreign Relations may be concerned about the ramifications of China accumulating larger gold reserves than those that the U.S. has and the People’s Bank of China (PBOC) giving the yuan some form of gold backing. This would pose serious challenges to the dollar as global reserve currency and thus to U.S. hegemony.