Hong Kong

"House prices have decoupled most from local incomes in Hong Kong, London, Paris, Singapore, New York and Tokyo. Buying a 60-square-meter apartment exceeds the budget of most people who work even in the highly-skilled service sector. Loose monetary policy has prevented a normalization of housing markets and encouraged local bubble risks to grow"

A bursting of property bubbles in London and New York would be expected to have an impact on national economies and indeed on national property markets. Sentiment would be badly impacted. Caution should be the order of the day.

• Fed puts December rate hike firmly on the agenda (Reuters)
• Charting the Markets: A More Hawkish Fed Rattles Investors (BBG)
• China to modernize and improve fiscal and tax systems (Reuters)
• Deutsche Bank to Cut 35,000 Jobs in Overhaul (WSJ)
• Deutsche Bank Said to Near $200 Million Sanctions Settlement (BBG)
• Barclays profits drop as it abandons cost-cutting targets (FT)

"In a warren of tiny shops beneath grimy residential towers, a white-haired man selling Snickers bars and fizzy drinks from a kiosk no larger than a cashier’s booth is figuring out a way to move $100,000 out of China"...

China's key index, the Shanghai Composite, was is up over 1%, or 40 points in early, to just under 3,500 - the highest in 2 months, a gain which however is well below Friday's pre-rate cut gain and if prior rate cut history is any indication, not to mention the weak reaction by commodities on Friday (continuing into today, where WTI turned green by the smallest of margins just seconds ago we would not be surprised to see China's stocks sliding back into the red very shortly as "sell the news" concerns return, and as the increasingly more addicted "markets" demand even more liquidity from central banks just to stay unchanged, let alone rise to new all time highs.

• ECB Haunted by Paradox as Draghi Weighs Risk of QE Signaling (BBG)
• At odds with Republicans, Hillary Clinton to testify on Benghazi (Reuters)
• House tees up conservative plans to raise debt limit (Hill)
• U.S., Russia to Meet at Syria Conference to Discuss Crisis (WSJ)
• Putin Gains Record Support Among Russians Over Syria, Poll Shows (BBG)
• China Plans 2020 Deadline for Dismantling Capital Controls (BBG)
• Nyrstar Drops the Most on Record as Mining Hit by Metal Rout (BBG)

26 years ago, today was envisioned as day when cars flew, holographic movies were box office hits, hoverboards roamed, and people were fired by fax. None of the happened. Instead the only "back to the future" moment this morning is a deja vu one we have seen every day for the past 7 years: bad economic news leading to surging stocks.

"Not everyone went down with The Titanic..."

Following more than a year in which Netflix pulled an Amazon quite successfully, burning through tens then hundreds of millions in cash but promising ever loftier growth, moments ago the magic finally ended, when Reed Hastings' company reported Q3 revenue of of $1.581 billion, wildly missing not only consensus expectations of $1.75 billion, but its own Q2 forecast of $1.593 billion, while also missing the bottom line estimate of $0.08, generating just 7 cents in Earnings.

After an initial knee-jerk reaction (perhaps on better-than-expected exports - signalling perhaps the devaluation 'worked), AsiaPac stocks are tumbling rapidly as the 11th monthly decline in imports (down a stunning 17.7% YoY in Yuan terms) signaling significant domestic weakness (and thus a larger drag on global growth). Policymakers are already stressing a weaker Yuan will boost exports, and despite recent Yuan strength, it appears the currency wars are far from over.

Even with the drop in oil prices, the $7 trillion invested in Sovereign Wealth Funds makes them important participants in global capital markets; what they do, even at the margin, matters.

If you've ever complained about your commute, or the traffic jams on your way to vacation destinations, here is some context from China...

Despite last night's disappointingly weak China re-open (notably less than US ADRs had implied), it appears everyone and their pet rabbit levered up as China margin-buying rose CNY21bn - the most in 2 months. It appears China's housing market also disappointed hope-strewn expectations as Golden Week home sales slowed dramatically YoY (blamed on weather). All is not well in the liquidioty stress department as despite ongoing injections, o/n HIBOR spiked 240bps overnight. China stocks are mixed at the open as PBOC strengthens the Yuan fix for the 5th day in a row to 2 month highs. Concerns are also growing in China's corporate bond market where bubble flows have greatly rotated from stocks to drive yields on risky firms to record lows.

After a "no change" statement from The BoJ, today's dismal Japanese data was terrible enough to be great news in the new normal as August machine orders drop the most in at least a decade and stocks, USDJPY dipped and ripped. However, it was the China open that investors waited for (after China shares rising 10% in US trading, and CNH strengthening on lower than expected reported outflows) as Goldman slashed its 12m target for Chinese stocks, and Bocom's chief strategist (who called the boom and the bust) says "rally is mirage of new dawn, volume is dying, sell the rallies." PBOC fixed the Yuan at its strongest in 2 months and while Chinese stocks opened up notably it was less than US ADRs suggested (CSI +4% vs ASHR +9.5%).

"The data are positive for the probability of the yuan getting into the SDR basket. It shows that the so-called devaluation in August, which wasn’t massive in value, hasn’t driven people away from using the yuan."