Yuan

"In such a downside scenario there could be pressure on the central bank to provide about 10-12% of GDP in reserves to the market to offset outflows as well as hedging demand (which could be met by intervening in forward markets). This is roughly USD1.0-1.2trn – that would be about 30% of its current reserve portfolio."

US equity futures have retraced the late-day ramp from Friday with Dow down around 65pts. Asia is opening weaker (NKY -900 from Thursday highs) with EM FX appearing not to get the "but we didn't hike" message from The Fed with MYR the worst hit for now (after a few days of strength). EM outflows accelerated according to Morgan Stanley, down 6% AUM in 12 weeks. PBOC devalued the Yuan fix by 0.11% (the most in 2 weeks). While Fed uncertainty and fears about China have caused global derisking, PBOC chief Fan says "the economy is stable," and China's Beige Book suggests 'everything is awesome', as the survey summarizes, "perceptions of China may be more thoroughly divorced from facts on the ground than at any time in our nearly five years of surveying the economy." If that's the case, then why is Janet in panic mode?

Non-bombasitc overview of the investment climate.  No, the sky is not falling.  This is not the end of days.  

China is looking more and more like good ol' United States...

"At the start, China wasn't very confident. The worry was that there was no money for this."

"At a recent investor gathering a question was asked, prior to the FOMC meeting, in the spirit of why the Fed should raise rates, whether or not anyone could argue that tapering itself was a “mistake”. It is an interesting question but the answer is surely a resounding “yes”. While a counterfactual is hard to prove, the impact of tapering in rates space is self evident. From the moment it began we saw a relentless fall in long term rates and a return to where those rates more or less stood around the onset of (endless) QE3." - DB

For China's middle class, whose dreams of market bubble riches just went up in a margin call, there is still hope to pretend to be richer than one's neighbor courtesy of a faux rose gold cell phone. The answer: a tablespoon of sperm. As Xinhua reports, "technophiles may not have to reach far to find the cash for Apple's latest model. According to an advertisement with the Shanghai Sperm Bank - all you have to do is donating." "No need to sell a kidney...Shanghai sperm bank can make your iPhone 6s dream come true," says the ad which has gone viral on China's most popular social networking app WeChat this week.

On Thursday, the Fed made it clear that its reaction function has changed. "Data dependency" is gone (or at least relegated to the backburner in times of global turmoil), and international and financial market developments are now officially guiding the FOMC's (tentative) hand. This epochal shift has left market participants asking one very simple question: "Ok, now what?" 

Having blamed the entire financial crisis on one reporter (despite the implicit government encourage of people to "invest in stocks"), detained "malicious sellers" (which killed the entire futures market), and now cracking down on overly-aggressive stock-pumping by "sinister stock squads," we thought we had seen it all from China. Until now... CHINA OFFICIAL: LUCKY THAT STOCK BUBBLE BURST BEFORE TOO LATE...

Despite the approval of various Asian nation officials (e.g. Japan's Amari: "Fed decision appropriate"), it appears non-hawkishness is not enough to keep the dream alive. Japan's Nikkei 225 is down over 600 points from its post-FOMC spike highs, and USDJPY has tumbled over 1 handle - back below 120.00. Chinese stocks are extending losses after last night's late tumble, as ironically, China's securities regulator has uncovered a number of market manipulators who boosted prices of some stocks to sky-high levels during the peak of the bull market, attracting numerous followers who have suffered heavy losses in the recent market crash. The PBOC strengthened the Yuan fix for the 2nd day in a row (by the most in 2 weeks).

In today's centrally planned world, the proliferation of NIRP means that nothing is sacred - not even a Swiss bank account...

Whether Janet Yellen admits it or not, you can bet that going into today’s most important Fed meeting ever (until the next one) the supposedly “data dependent” FOMC has taken a good hard look at what’s happening in China in the wake of Beijing’s not-so-smooth transition to a new currency regime. A fresh look at the data suggests outflows from July through mid-Septemeber total more than $300 billion.

Kyle Bass shared his macro views during the “Squawk on the Street”

With a complex and disaster-prone system of interdependence causing social strife and chaos, why not just simplify everything with a global currency and perhaps even global governance? The elites will squeeze the collapse for all it’s worth if they can, and a Fed rate hike may be exactly what they need to begin the final descent.

The evening started with disappointing Japanese trade data cross the board - weakest imports, exports, and trade balance in 6 months - which follows the largest selling of Japanese stocks by foreigners ever. China opened with the first rise in margin debt in 6 days, stocks were lower  in the pre-open after last night's epic farce ramp. PBOC strengthened the Yuan fix modestly and also injected another CNY 40 billion.