After a significant downward revsision to August's data (to -2.3% MoM), September Durable Goods New Orders dropped 1.2% (better than the expected 1.5% drop only due to historical revisions) for the 5th monthly drop this year. Year-over-Year, Durable Goods orders tumbled 3.6%, accelerating weakness from August amid major revisions. This is the 6th consecutive YoY drop, something not experienced outside a recession. Under the covers it was just as ugly with Non-defense, ex-aircraft orders dropping 0.3% (notably missing expectations) after a huge downward revision for August. What is most worrisome, however, is the collapse in Core Capex YoY down 7.9% NSA - the worst since 2009.
Last week, in the aftermath of dovish announcements by first the ECB and then the PBOC, the S&P500 jumped another 2.1% rising to its best level since early August. But who was buying? We now know who wasn't: according to BofA "BofAML clients were net sellers of US stocks for the third consecutive week, in the amount of $1.7bn. Similar to in the prior two weeks, institutional clients, hedge funds, and private clients alike were all net sellers."
- Hilsenrath - The Fed Strives for a Clear Signal on Interest Rates (WSJ)
- Tentative Budget Deal Reached, Raising Debt Limit (WSJ)
- China Calls U.S. Challenge Over Island Threat to Regional Peace (BBG)
- UK economy slows more than expected in third quarter (Reuters)
- In China’s Alleyways, Underground Banks Move Money (WSJ)
- Inside the Secretive Circle That Rules a $14 Trillion Market (BBG)
- A Frustrated Koch Brother Decides It’s Time to ‘Spout Off’ (WSJ)
Two biggest move overnight came from everyone's favorite carry pair, the USDJPY, which may have finally read what we said yesterday, namely that with the Fed and ECB both doing its job, there is little need for the Bank of Japan to repeat its Halloween massacre for the second year in a row, and as a result will keep its QQE program unchanged. It promptly tumbled from its 121 tractor level, to just above 120.25, where BOJ bids were said to be found. With the FOMC October meeting starting today, the other overnight catalyst was not surprisingly the latest Hilsenrath scribe in which he removed any uncertainty about a Wednesday hike, "leaving mid-December as the central bank’s last chance to raise rates this year."
Update: According to reports in on Monday evening, the USS Lassen has indeed sailed within 12 nautical miles of China's islands in the Spratlys.
For weeks, the US was rumored to plan a "freedom of navigation" exercise in the contested Spratly islands which, as we’ve pointed out several times this month, amounts to sailing by China's man-made outposts just to see if the PLA will shoot. Moments ago, the wires lit up with news that President Obama has green-lighted the exercise. The USS Lassen, a guided-missile destroyer, is now set to sail within 24 hours.
Following the first ever congressional hearing on “Stingray” cellphone surveillance, new details reveal the Secret Service and the Internal Revenue Service are also using the controversial spying devices.
The signs of regime change are everywhere. From embarrassment by Russia's success in Syria to China's creation of its own 'World Bank' and SWIFT alternative, the trend of de-empirization are growing, but tonight's news that Washington will sell oil from its strategic reserve in order to meet budget constraints and avoid default (as China takes advantage of low prices to build its own reserves) is simply stunning in its analogy of the shifting world order.
While 'zombies' may be the personification of our darkest fears, they embody the government’s paranoia about the citizenry as potential threats that need to be monitored, tracked, surveilled, sequestered, deterred, vanquished and rendered impotent. Why else would the government feel the need to monitor our communications, track our movements, criminalize our every action, treat us like suspects, and strip us of any means of defense while equipping its own personnel with an amazing arsenal of weapons? For years now, the government has been carrying out military training drills with 'zombies' as the enemy. “We the people” or, more appropriately, “we the zombies” are the enemy in the eyes of the government.
Germany's Suddeutsche Zeitung reports that just two (or is it three, this past summer is one big blur) months after Greece voted through its third bailout, one which will raise its debt/GDP to over 200% on a fleeting promise that someone, somewhere just may grant Greece a debt extension (which will do absolutely nothing about the nominal amount of debt), its creditors have already grown tired with the game and are refusing to pay the next Greek loan tranche of €2 billion.
Beijing is apparently working on innovative ways to solve China's excess capacity problem again...
Billy Sewell began offering health insurance this year to 600 service workers at the Golden Corral restaurants that he owns. He wondered nervously how many would buy it. Adding hundreds of employees to his plan would cost him more than $1 million — a hit he wasn’t sure his low-margin business could afford. His actual costs, though, turned out to be far smaller than he had feared. So far, only two people have signed up. “We offered, and they didn’t take it,” he said.
Everyone Is Asking: "If Chinese Consumption Is Rising, Why Are Its Malls Empty?" - Here Is The AnswerSubmitted by Tyler Durden on 10/26/2015 18:52 -0400
There are two general schools of thought amongst noted contrarians and libertarians regarding China’s overriding objectives. One school has it that China is very much a part of the One World Government philosophy and their primary goal is to acquire a more powerful seat at the IMF. Having done so, they will settle in and be content to be one of the leading jurisdictions that run the world collectively. The other school suggests that China means to become the most powerful nation in the world - to replace the US in every way as the world’s dominant nation. And that’s the case here. The world’s most powerful (and most oppressive) political/economic power structure has begun to go under the bulldozer. Its replacement will hopefully be a better one.