China

Back in August, angry investors captured Shan Jiuliang, the head of Fanya Metals Exchange, in a daring predawn raid on a luxury hotel in Shanghai. The citizen's arrest came after Fanya stopped making payments on WMPs it issued. Now, it appears as though Shan has been captured again - only this time, it's not clear whether he'll be coming back.

2015 has witnessed several events that had, and will have, negative repercussions on individual freedom. Orwellian totalitarianism is increasingly creeping into our everyday lives. How much more intrusive will the violations of our liberties become and for how long will the establishment get away with this? With regards to the financial system, no real solution was found to issues such as those in the euro zone. Furthermore, the financial system as a whole once again got deeper into debt. For how much longer can central banks and governments continue kicking the can down the road without any real reform?

Timing a crash can be a fool's errand, and fortunately such efforts are largely irrelevant if you are tail hedging (though they are quite relevant if you aren't). But this doesn't mean that exercises in timing are without merit. Without a doubt (or at least with over 99% confidence), bad things happen with increasing expectation when conditioning on higher Q ratios ex ante. Factoring time into the equation, and again based on history, the confidence interval around the median time would point to an expectation that the crash should commence right about now.

The first Fed rate hike in seven years was supposed to trigger a powerful equity rally as the bulls expected money to pour out of bonds into stocks; especially into the cyclicals. Unfortunately for the equity bulls,, as Mizuho's Steve Ricchiuto notes, this time things are different and instead of the Fed rate hike triggering the traditional Santa Claus rally; it looks like the FOMC is actually the Grinch. The key message delivered by the Fed though the SEP, the DOTS and the Chair’s post meeting press conference is that this is the best the economy is going to get.

Without being able to predict the election outcome in 2016, it will be prudent to keep cash levels high in order to maintain flexibility. Furthermore with the leading beta asset classes starting to exhibit corrections, there are growing signs that the investing environment is changing, which should give investors pause.

Since our Keynesian central bankers have no clue that their prodigious money printing resulted in the drastic underpricing of credit and capital over the course of the past two decades, they are flying blind. They simply fail to see that the global economy is now swamped in more excess capacity than at any time since the 1930s, and probably even then. So they keep expecting the commodity cycle to momentarily bottom and prices to rebound, thereby reflating CapEx and household spending.

When the only healthy part of an already-impaired system turns negative, everyone will feel the resulting pain.

Despite every effort by The Fed to convince the world that everything is awesome, it's not. From China growth risks to concerns about tightening financial conditions, Goldman warns so-called 'grey swan' fears are rising with Brexit, Trumpe elected, widening terrorist threats, and increased protectionism the most impactful.

• Battered oil wins respite, lifts stocks (Reuters)
• Oil Halts Decline as Emerging Market Stocks Climb on China (BBG)
• Bonds Set to Beat Stocks Globally in 2015 After China Falters (BBG)
• SpaceX Falcon rocket nails safe landing in pivotal space feat (Reuters)
• China Leaders Flag More Stimulus After Top Economic Meeting (BBG)
• SEC to Retrench Case Against SAC’s Steven A. Cohen (WSJ)

It has been a seesaw session with U.S. stock index futures following their dramatic buying burst in the last half hour of market trading yesterday by first rising, then falling, then rising again alongside European equities both driven almost tick for tick with even the smallest move in the carry trade of choice, the USDJPY, even as Asian shares trade near intraday highs after China’s leaders signaled they will take further steps to support growth.

In the final throes of empire-decline, we invariably observe the more sociopathic trends of a failing power, such as we’re seeing today from the US. First and foremost, any empire declines as a result of economic mismanagement. Decline from within (pandering to the populace with “bread and circuses”) and without (endless conquest and/or maintenance of dominance over far-flung geography) drain even the wealthiest government. But the leaders of a collapsing empire invariably make a fatal mistake: they assume that all the goodwill the empire gained when it was on its rise is permanent – that it will continue, even if the empire behaves like the world’s foremost bully. This is never the outcome.

For the second time in two months, an economic data series that indicate drastically weak performance in China has been "suspended." Having seen Markit/Caixin's flash gauge of China's manufacturing discontinued in October (having plunged notably divergently from the government's official data), Bloomberg reports that the publishers of the alternative China Minxin PMI will stop updating the series to make a "major adjustment."

At least 91 people were missing after a giant mound of mud and construction waste spewed out of an overfull dump site in a southern China boomtown and buried 33 buildings in the country's latest industrial disaster.