Copper

Some have started to ask: what happens if Glencore were to fail? Well, since Glencore is not just a miner, but probably the world's largest commodity trading desk, and is a key commodity counterparty for everyone, the answer is simple: Lehman... only this time in the commodity space.

• One Volatile Week Could Seal Fed Stance After Years of Low Rates (BBG)
• Fed to dominate week of central bank meetings (Reuters)
• 30 years on, parallels with Plaza but currency universe very different (Reuters)
• Wal-Mart's Suppliers Are Finally Fighting Back (BBG)
• China's Rising CPI, Deepening PPI Deflation Challenges PBOC (BBG)
• Petrobras spending plan already obsolete, new cuts likely (Reuters)
• Bank of Montreal to Buy GE Capital’s Transportation-Finance Unit (WSJ)

Perhaps after intervening every single day in the past week (remember that FT piece saying the PBOC would no longer directly buy stocks... good times) in either the stock or the FX (both on and offshore) market, China needed a day off; perhaps even the algos got tired of constantly spoofing the E-mini and inciting momentum ignition, but for whatever reason the overnight session has been oddly uneventful, with no ES halts so far, few USDJPY surges (then again those come just before the US open), and even less violent CNY or CNH moves, leading to virtually unchanged markets in Japan (small red) and China (small green). And while the initial tone in Europe has been modestly "risk off", it is nothing in comparison to the massive gyrations that have become a stape in the past few weeks.

And monetary policies will be “ineffective”: Natixis

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.

And to think all it took was Gartman going short of stocks in 25% correction terms yesterday...

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If the market is right, Goldman warns that current cross-asset-class volatility appears to be pricing in a lot of economic damage. As they note, VIX doesn’t just trade the economy; it also has a strong and often humbling element of risk sentiment baked in.

Copper prices have surged over 4% this morning, breaking above the 50-day moving average (trading 2.41, near 2-month highs). Aside from Glencore's demise and modest strength in the Chilean peso today, this seems more like an algo-driven run off China's massive intervention-driven momentum.

• Sure, why not: China Rebounds as Trade Data Disappoints (BBG)
• Oh, that's why: China's Stock-Rescue Tab Surges to $236 Billion, Goldman Says (BBG)
• Can't make this up: German finmin says must avoid reliance on debt, cenbank stimulus (Reuters)
• Stocks rise after contrasting China, Germany trade data (Reuters)
• Euro zone second-quarter GDP revised up as Italy grows faster (Reuters)
• Brent oil rises on European, Chinese data; oversupply weighs (Reuters)
• Corporate Prosecution Deals Headed for a Legal Test (WSJ)

The last time we looked at Chinese stocks, just a few hours ago, they were on pace to close back under 3000, following the latest collapse in trade, where in August exports dropped 5.5% (last -8.3%) while imports tumbled -13.8% in dollar terms (worse than the -8.1% prior). As the Reuters chart below shows, this was the 10th month in a row of declines and the worst stretch since the 2008 crisis, confirming China will need far more currency devaluation to stabilize the trade pain. And then Chinese authorities intervened with gusto, waiting until the start of the afternoon session, at which point a massive buying orgy ensued, and pushed the SHCOMP from down more than 2% to close at the day highs, up some 2.9%!

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Early this morning Glencore finally capitulated and admitted defeat not only on its expansionary phase (it was just last year Glencore had approached Rio Tinto to engage in a merger), but on its shareholder "friendliness", with a stunning annoucement that it would proceed in a $10 billion debt reduction, issuing $2.5 billion in equity in the form of a rights offering, sell $2 billion worth of assets (such as "proposed precious metals streaming transaction(s) and the minority participation of 3rd party strategic investors in certain of Glencore’s agriculture assets, including infrastructure"), cut working capital by $1.5 billion, cut capex and its loan book by a further $1-$1.8 billion... oh, and it would also scrap its final $1.6 billion dividend as well as next year's interim payout, saving a further $2.4 billion. All this because our "best way to trade China's blow up" was finally picking up steam.