Mexico

 Manufacturing Just Crashed And VCs Face A “Dismal Fundraising Climate”

The highlights from Bill Gross' latest monthly piece:

• Armageddon is not around the corner. I don’t believe in the imminent demise of the U.S. economy and its financial markets. But I’m afraid for them.
• Unless we begin to close this gap, then the inevitable result will be that our debt/GDP ratio will continue to rise, the Fed would print money to pay for the deficiency, inflation would follow and the dollar would inevitably decline. Bonds would be burned to a crisp and stocks would certainly be singed; only gold and real assets would thrive within the “Ring of Fire.”
• If the fiscal gap isn’t closed even ever so gradually over the next few years, then rating services, dollar reserve holding nations and bond managers embarrassed into being reborn as vigilantes may together force a resolution that ends in tears. The damage would likely be beyond repair.
• The U.S. and its fellow serial abusers have been inhaling debt’s methamphetamine crystals for some time now, and kicking the habit looks incredibly difficult.

• Trade Slows Around World (WSJ)
• Debt limit lurks in fiscal cliff talks (FT)
• Welcome back to the eurozone crisis (FT, Wolfgang Munchau)
• Euro Leaders Face October of Unrest After September Rally (Bloomberg)
• Dad, you were right (FT)
• 25% unemployment, 25% bad loans, 5% drop in Industrial Production, and IMF finally lowers its 2013 Greek GDP forecast (WSJ)
• Global IPOs Slump to Second-Lowest Level Since Financial Crisis (Bloomberg)
• France's Hollande faces street protest over EU fiscal pact (Reuters)
• EU Working to Resolve Difference on Bank Plan, Rehn Says (Bloomberg)
• China manufacturing remains sluggish (FT)
• Samaras vows to fight Greek corruption (FT) ... and one of these days he just may do it
• Leap of Faith (Hssman)
• Germany told to 'come clean’ over Greece (AEP)

For all the obvious reasons, China's ruling elites will do their best in the next few months to project an image of unity and self-confidence, and to convince the rest of the world that the next generation of leaders is capable of maintaining the party's political monopoly. That is, unfortunately, a tough sell.  Confidence in the party's internal cohesion and leadership has already been shaken by the Bo affair, endemic corruption, stagnation of reform in the last decade, a slowing economy, deteriorating relations with neighbors and the United States, and growing social unrest.  The questions on many people's minds these days are how long the party can hold on to its power and whether the party can manage a democratic transition to save itself. China is in a socioeconomic environment in which autocratic governance becomes increasingly illegitimate and untenable as its rapid economic development has thrust the country past what is commonly known as the 'democratic transition zone' where autocratic regimes face increasing odds of regime change as income rises.

The following is a comprehensive list of key events to watch over the next several weeks – events that could have very significant bearing on how the euro sovereign debt crisis evolves.

26 times the GDP of Vermont!

• Madrid Protesters March Again as Spain Braces for Cuts (Bloomberg)
• Euro Can Bear Fewer Members as Czech Leader Calls Greeks Victims (Bloomberg)
• Chinese Industrial Profits Fall 6.2% in Fifth Straight Drop (Bloomberg)
• China pours $58bn into money markets (FT)
• Beijing vows more measures on Diaoyu Islands (China Daily)
• Noda vows no compromise as Japan, China dig in on islands row (Reuters)
• Politico’s Paul Ryan Satire: The Joke’s on Them (Bloomberg)
• Electoral Drama Shifts to Ohio (WSJ)
• German opposition party targets banks (FT)
• Fed action triggers fear of new currency wars (FT)
• Ex-Credit Suisse CDO Boss Serageldin Is Arrested in U.K. (Bloomberg)
• Romney ‘I Dig It’ Trust Gives Heirs Triple Benefit (Bloomberg)

Today’s AM fix was USD 1,766.75, EUR 1,369.36, GBP 1,088.37 per ounce.
Yesterday’s AM fix was USD 1,758.50, EUR 1,361.91 and GBP 1,084.96 per ounce.

Gold fell $8.60 or 0.49% in New York yesterday and closed at $1,764.50. Silver slipped to a low of $33.594 then rebounded in New York, but it still finished with a loss of 1.62%.

Gold Seasonality Chart - Heatmap

While oil prices have slid in their ubiquitous post-QE manner in the last few days, they remain notably elevated amid growing tensions in Iran and central bank largesse spillovers. These short-term fluctuations, however, pale in significance to long-run implications of peak-oil and whether it exists or not. From cost implications to technological innovation and demand destruction and supply constraints, the feedback loops of oil prices over time provide vicious and irtuous cycles for the global economy as we know too well. This brief clip provides all the color we could need on the matter of fossil fuel dilemmas and the diverging opinions of Astenbeck's (ex-Phibro) Andy Hall and Goldman's Michele Della Vigna provide the depth.

• Europe’s crisis will be followed by a more devastating one, likely beginning in Japan. (Simon Johnson)
• Porsche, Daimler Indicate Europe’s Car Crisis Spreading (Bloomberg)
• No progress in Catalonia-Madrid talks (FT)
• Hilsenrath speaks: Fed's Kocherlakota Shifts on Unemployment (WSJ) - luckily QEternity made both obsolete
• Lenders Reportedly Consider New Greek Haircut (Spiegel)
• Fed Officials Highlight Benefits of Bond-Buying (WSJ)
• ESM to Launch without Leverage Vehicle Options (WSJ)
• Japanese companies report China delays (FT)
• Borg Says Swedish Taxes Can’t Go Into Ill-Managed European Banks (Bloomberg)
• Greek Leaders Struggle With Spending Reductions (Bloomberg)
• Asian Stocks Rise as iPhone 5 Debut Boosts Tech Shares (Bloomberg)
• China government's hand seen in anti-Japan protests (LA Times)

• Anti-Japan demonstrators protest in New York City (China Daily) ...and the propaganda: Younger generation feels wave of emotions (CD)
• And the retaliation: Obama to launch auto trade case against China (Reuters)
• Spanish Banks Bleeding Cash Cloud Bailout Debate (Bloomberg)
• Chicago teachers extend strike (Reuters); Emanuel Promises He’ll Sue to End Chicago Teacher Strike (Bloomberg)
• China hurts own credibility with Xi's vanishing act (Reuters)
• European Squabbling on Euro Crisis Solution May Test Rally (Bloomberg)
• Two South Africa mines reopen, most don't (Reuters)
• Finance Industry Warns of ‘Cliff Effect’ in ECB’s Bond Plan (Bloomberg)
• China struggles to cure the violent ills of health system (Reuters)
• QE3 is for Main Street, except... it isn't: QE3 hit by mortgage processing delays (FT)
• Probe focuses on JPMorgan's monitoring of suspect transactions (Reuters)
• As explained here before: Spanish Bonds Decline as EU Policy Makers Clash on Bank Plan (Bloomberg)

If you live long enough—knock on wood—pretty soon it’ll add up to real money.

Which is it Ms. Lagarde?

• China Output Growth Slows as Leadership Handover Looms (Bloomberg); Weak China trade data raises Beijing spending stakes (Reuters)
• Italy Q2 GDP revised down to -0.8% year-on-year on weak domestic demand (Economic Times)
• Troika disagreed with €2 billion in Greek "cuts" (Reuters)
• No Greek bottom in sight yet: Greek IP, Manufacturing Output plunge compared to year earlier (WSJ)
• France's Hollande sees 2013 growth forecast about 0.8 pct (Reuters), France plots tax hikes of up to 20 bln euros (Reuters)
• Euro Crisis Faces Tests in German Court, Greek Infighting (Bloomberg)
• Geithner sells more AIG stock (FT)
• Japan infuriates China by agreeing to buy disputed isles (Reuters)
• Euro crisis to worsen, Greece could exit euro: Swedish FinMin Anders Borg (Economic Times)
• ‘Lead or leave euro’, Soros tells Germany (FT)
• German MP makes new court complaint against euro plans (Reuters)
• Obama super-Pac in push to raise $150m (FT)

Suddenly the delicate balancing of variables is once again an art and not a science, ahead of a week packed with binary outcomes in which the market is already priced in for absolute perfection. Per DB: We have another blockbuster week ahead of us so let's jump straight into previewing it. One of the main highlights is the German Constitutional Court's ruling on the ESM and fiscal compact on Wednesday. On the same day we will also see the Dutch go to the polls for the Lower House elections. Thursday then sees a big FOMC meeting where the probabilities of QE3 will have increased after the weak payrolls last Friday. The G20 Finance Ministers and Central Bank Governors will meet on Thursday in Mexico before the ECOFIN/Eurogroup meeting in Cyprus rounds out the week on Friday. These are also several other meetings/events taking place outside of these main ones. In Greece, PM Samaras is set to meet with representatives of the troika today, before flying to Frankfurt for a meeting with Draghi on Tuesday. The EC will also present proposals on a single banking supervision mechanism for the Euro area on Tuesday. If these weren't enough to look forward to, Apple is expected to release details of its new iPhone on Wednesday. In summary, it will be a good week to test the theory that algos buy stocks on any flashing red headlines, no longer even pretending to care about the content. Think of the cash savings on the algo "reading" software: in a fumes-driven market in which even the HFTs no longer can make money frontrunning and subpennyiong order flow, they need it.