Hong Kong

It has become virtually impossible to differentiate between actual central bank intervention, hopes of central bank intervention, and how the two interplay on what was once the "market" but is now merely the place where money printers duke it out every day in some pretense of price discovery set by those who literally print money.

• Global stocks rally as investors scent fresh stimulus (Reuters)
• Japan's Nikkei 225 Rises 7.7% for Biggest Gain Since October 2008 (BBG)
• China's Stocks Advance for Second Day Amid Stimulus Speculation (BBG)
• Abe Pledges Corporate Tax Cut as Investments Slump (BBG)
• U.S. to shift 50 staff to boost office handling Clinton emails (Reuters)
• Chinese Premier Li Keqiang Says China Doesn't Want a Currency War (BBG)
• One Thing China Got Right (BBG)

Keys in the week ahead:  equity markets--still look lower; China--volatility likely to continue; Fed--market says no Sept hike

Divegence driver of the dollar was never predicated on a particular time frame for the Fed's lift-off.  Others are easing.  Trajectory is the key.  Here is my sense of the near-term dollar outlook, wiht a look at some other asset markets as well.  

"Following the RMB devaluation some weeks ago, markets have been erratic, fearful that the initial move was the beginning of a larger devaluation cycle that could disrupt global markets. Given how worried markets have been about China, a better-than-expected reserves number holds the potential for risk assets to rally as devaluation fears abate."

• Jobs Report Could Seal the Deal on Rates (WSJ)
• The Jobs Report and the August Curse: Jobs Day Guide (BBG)
• Migrants hold out on Hungarian 'freedom train'; Orban says millions coming (Reuters)
• Migrant Crisis Divides Europe (WSJ)
• German industry orders fall in July on weak foreign demand (Reuters)
• Alibaba’s Jack Ma, Joe Tsai to Borrow $2 Billion Against Shares (WSJ)
• U.K. Retailers Post Worst Sales Decline Since Financial Crisis (BBG)

Moments ago, US equity futures tumbled to their lowest level in the overnight session, down 22 points or 1.1% to 1924, following both Europe (Eurostoxx 600 -1.8%, giving up more than half of yesterday's gains, led by the banking sector) and Japan (Nikkei -2.2%), and pretty much across the board as DM bonds are bid, EM assets are all weaker, oil and commodities are lower in what is shaping up to be another EM driven "risk off" day. Only this time one can't blame the usual scapegoat China whose market is shut for the long weekend.

"China is imposing fresh controls to prevent too much money from leaving the country, in an effort to keep badly needed funds at home to battle a deepening slowdown in the world’s No. 2 economy." This is undsiputedly bad news for China, but Blythe Masters would be the first to admit, escalating Chinese capital controls would be just the thing bitcoin needs to surge, and surpass, it previous all time highs...

Stocks in Asia and Europe have fallen sharply again this morning and gold remains robust on safe haven demand

• Markets on edge as policymakers flex muscles (Reuters)
• European shares recover from rough ride (Reuters)
• For Stock Markets, the Moment When Humans Matter (WSJ)
• Puerto Rico's PREPA, bondholders have framework for deal (Reuters)
• Hundreds of migrants protest at Budapest station, want to go to Germany (Reuters)
• New Whale Seen Moving Tokyo Markets (BBG)

For the last few years, US equity traders have become conditioned to expect the miraculous arrival of some heavy-handed levitation in stock markets as 330pmET rolls by. This became ubiquitous enough to inspire a Twitter account. Well, it appears the Chinese have learnt a thing or two from the American manipulators... behold China's 2pm Ramp Capital at work.

Overnight, China decided to take steps to reduce "macro financial risks." And by that they mean "do something quick to help ease pressure on the yuan" and by extension, on the PBoC’s rapidly depleting FX reserves. To that end, starting October 15 banks will have to hold the equivalent of 20% of clients' FX forward positions with the PBoC, where the money will sit, frozen, for a year, at 0% interest.

• Charting the Market: New Month, Same China (BBG)
• China jitters send stocks tumbling (Reuters)
• Oil falls on weak China factory data (Reuters)
• Euro zone factory growth eases in August despite modest price rises (Reuters)
• Euro-Area Joblessness Falls to Lowest Level Since Early 2012 (BBG)
• Clinton friend advised on U.S. politics, foreign policy (Reuters)
• Korea exports slump as Asia's woes deepen (Reuters)

The fundamentals for the US dollar are terrible, but people keep dumping money into it like trained monkeys simply because nothing else in financial markets makes any sense. This perception of 'safety' is based on a complete myth - every credible fundamental suggests that the dollar is dangerously overvalued; but if not the US dollar, then which currency is the safe haven? The euro is garbage, the Chinese are fighting a depression, Japan is a disaster. And that’s precisely the point. When every option in the financial system is grounded in absurdity, the only solution is to start looking for safety outside of it.

• Hilsenrath: Fed Appears to Hold Line on Rate Plan (WSJ)
• Europe, Asia stocks set for worst monthly drop in three years on China, Fed (Reuters)
• Beijing abandons large-scale share purchases (FT), if only for a few hours
• China’s Next Problem: Paying for Its Stock-Market Bailout (WSJ)
• Crises Put First Dents in Xi Jinping’s Power (WSJ)
• Man Group’s China Chief Said to Assist Police in Probe (BBG)