SPY

The average person assumes the powers-that-be actually know what they are doing and would never lead us into disaster, but quoting my breakfast companion, that would be a very poor assumption. Simply, while mass war on the level of the wholesale slaughter commonplace in the last century is unimaginable to most in the modern context, it is never more than the equivalent of a faulty alarm system away from occurring. Those history buffs among you will confirm that up until about a week before World War I began, virtually no one in the public, the press, the political class, or even the military had any idea the shooting was about to start. And 99.9% of the people then living had no idea the war was about to begin until after the first shot was fired.

"Back in the heyday of the old Soviet Union, a phrase evolved to describe gullible western intellectuals who came to visit Russia and failed to notice the human and other costs of building a communist utopia. The phrase was “useful idiots” and it applied to a good many people who should have known better. I now propose a new, analogous term more appropriate for the age in which we live: useful hypocrites. That’s you and me, folks, and it’s how the masters of the digital universe see us. And they have pretty good reasons for seeing us that way."

If only George Orwell could see us today.  When he wrote “1984” back in 1948, he probably never imagined that the “totalitarian, bureaucratic world” that he imagined would ever actually become a reality.  But that is precisely what is happening. The control freaks that run our society are absolutely obsessed with watching, tracking, recording and monitoring virtually everything that we do.  We truly are becoming a “1984” society, and if we continue on the path that we are currently on eventually our world will be transformed into something more hellish than anything that George Orwell ever imagined.

• "The hate us for our..." Americans’ Cellphones Targeted in Secret U.S. Spy Program (WSJ)
• Ukraine and Russia take center stage as leaders gather for G20 (Reuters)
• Moscow and Kiev trade accusations; U.S. warns Russia against escalation (Reuters)
• Heartland Central Banker Calls Asset Bubbles Top Concern (BBG)
• U.S. Said to Give Banks December Deadline in FX Probe (BBG)
• Series of Failures Enabled White House Breach, Report Finds (WSJ)
• Yen plumbs seven-year trough on likely Japan sales tax delay (Reuters)
• JPMorgan Chase Bankers Said to Lead Moscow Departure (BBG)

Two words tell you all you need to know about today's equity trading... no volume (lowest since Aug27th). The main theme of today - away from stock markets - was to unwind some or all of Friday's moves on the dismal Italy/Greece data: Treasury yields jerked almost 10bps off their lows with 30Y almost retracing the entire Friday rally; The USD rallied, recovering some of its losses from Friday (led by CAD and JPY weakness - which were both stronger Friday); gold and silver were slammed today - almost retracing Friday's gains; and oil prices gave up all their intraday gains to close notably lower. USDJPY and bonds decoupled from stocks which appeared led by a VIX-smashing day, sending the fear index below 12.5. The Dow and S&P closed at all-time highs.

John Anderson, an American tourist from San Clemente, California, was driving down a poorly-maintained highway when he saw flashing lights in his rearview mirror. After a brief exchange with the local police officer, Anderson was shocked when the cop started searching his vehicle. Anderson had $25,180 in US dollar cash in the car, which by the way was not a crime according to the local laws. When the cop saw it, he told Anderson that we would take it and threatened him with arrest if he protested. Ultimately Anderson gave in; the cop let him go and did not charge him with a crime, but took every last penny in the vehicle. And for the last two years, Anderson has been trying to unsuccessfully fight it in the country’s Kangaroo court system. Clearly we should all avoid going to such dangerously corrupt third world countries.

To 'prove' that the end of QE3 is not a negative for stocks and to 'confirm' the Fed's narrative that the economy is surging (despite all the unsustainable one-offs in the GDP print), algos are tearing stocks higher, targeting the crucial 2,000 S&P level... thanks to 2-week old headlines from Japan, a broken options market, and the NYSE unable to report trades... As Nanex notes "this is a bigger event than the 2013 market blackout."

• CDC says returning Ebola medical workers should not be quarantined (Reuters)
• Sweden’s central bank cuts rates to zero (FT)
• Hacking Trail Leads to Russia, Experts Say (WSJ)
• Discount-Hunting Shoppers Threaten Stores’ Holiday Cheer (BBG)
• Apple CEO fires back as retailers block Pay (Reuters)
• Repeat after us: all China data is fake - China Fake Invoice Evidence Mounts as HK Figures Diverge (BBG)
• FX Traders’ Facebook Chats Said to Be Sought in EU Probe (BBG)
• Euro Outflows at Record Pace as ECB Promotes Exodus (BBG)
• Apple boosts R&D spending in new product hunt (FT)

Winston Churchill once said that "You can always count on Americans to do the right thing - after they've tried everything else." By 'everything else' apparently he also meant hiring thousands of Nazis as Cold War spies and informants and, according to the NYT, "as recently as the 1990s, concealing the government’s ties to some still living in America."

In the first sign that, just in time for winter, the tentative European jawboning alliance against Russia is collapsing (since the "costs", sanctions and other economic means inflicted upon the Kremlin ended up backfiring and pushing Europe into a triple-dip recession instead), earlier today Poland announced that it will move thousands of troops toward its eastern borders, i.e., Ukraine, in what AP dubbed a "historic realignment of a military structure built in the Cold War."

*PATIENT IN NYC TESTS POSITIVE FOR EBOLA, NEW YORK TIMES SAYS, EBOLA PATIENT GIRLFRIEND QUARANTINED: CNN
*TREASURIES ADVANCE, S&P 500, NASDAQ 100 FUTURES EXTEND DECLINES ON EBOLA REPORT

Cuomo: "There is no reason for New Yorkers to be alarmed..." *HAVE IDENTIFIED 4 PEOPLE IN CONTACT WITH EBOLA PATIENT, PATIENT WENT ON 3-MILE JOG, BOWLING, SUBWAY

Dr Craig Spencer, 33, who returned to the U.S. ten days ago from Guinea, was admitted to Bellevue Hospital in midtown Manhattan on Thursday and is being cared for in isolation. The doctor flew to Africa on September 18 to treat patients in Guinea with non-profit organization, Medecins San Frontieres (MSF).  On October 16, he checked in at a hotel in Brussels, Belgium, presumably on his return journey from Guinea to the U.S. 

"There is no crueler tyranny than that which is perpetuated under the shield of law and in the name of justice." —Charles de Montesquieu

If there was any silver lining to the horrifying events that took place in Ferguson, Missouri which riled the month of August, it has finally brought the issue of police militarization to the forefront. How did this happen?

"If you like your phone secretly spied on, you can keep it," appears to be the message from the FBI. As Bloomberg reports, FBI Director James Comey said yesterday that companies like Apple and Google should be required to build surveillance capabilities into their products to help law enforcement with their probes, adding "if the challenges of real time data interception threatened to leave us in the dark, encryption threatens to lead us all to a very dark place."

• No Happy Ending for Investors in Central Bank Fairy Tale (BBG)
• Ebola Response Strains Hospitals (WSJ)
• Obama, foreign military chiefs, to thrash out Islamic State plans (Reuters)
• Draghi’s ‘Whatever It Takes’ Plan on Trial at EU Court (BBG)
• Too-Big-to-Fail Banks Face Up to $870 Billion Capital Gap (BBG)
• Iran’s Message to World: You Need Us to Fight Islamists (BBG)
• Facing new oil glut, Saudis avoid 1980s mistakes to halt price slide (Reuters)
• Ukraine Grannies Outprice Banks on Hryvnia Black Market (BBG)
• HK police use sledgehammers, chainsaws to clear protest barriers, open road (Reuters)
• Gazprom Quarterly Net Rises 13%, Misses Estimate on Ukraine Debt (BBG)

At 1532ET today (Columbus Day - with half the market absent), someone - apparently having waited to see if the almost 'ubiquitous' 330pm Ramp would occur - decided it was time to dump three-quarters of a billion dollars notional of US equity market exposure in 1 second. The results of this forced liquidation (or utter disregard for fiduciary duty) were as follows...