Morgan Stanley

For the first time in almost 3 years, the 'market' is fighting the PBOC in the FX markets. The last month has seen USDCNY rise almost 9 handles to as high as 6.21 (the weakest CNY in 5 months). At the same time, the PBOC's official 'fix' of CNY has been strengthened to below 6.12 (the strongest CNY in 9-months) diverging by the most in six months from the market. "The market is staying cautious and even bearish on the China macro outlook," notes Morgan Stanley, but as HSBC explains, "China doesn't want to join the currency wars [and wants to stall any speculation on trend] and that explains the fix movement." Simply put, markets doubt the PBOC and believe it will eventually be dragged into the currency war or just fundamentally deteriorate enough to warrant capital flight.

Are much lower oil prices good news for the U.S. economy?  Only if you like collapsing capital expenditures, rising unemployment and a potential financial implosion on Wall Street.

The crude carnage continued overnight with oil prices across the entire complex crashing through support to new cycle lows. Despite recent strategic reservce demand in China, the world's oil glut continues as global growth expectations plunge leaving WTI trading as low as $64.10, Brent $66.77 (narrowing the Brent-WTI spread to $2.68 from $3.23 on Friday), and most stunning of all, Canada Heavy as low as $49.24. Speculators and money managers appear to be BTFD as they increased net long positions last week (amid the price slump) but comments from Kuwait Petroleum's CEO and Iran officials suggest 'lower for longer' on prices will be the norm. As Morgan Stanley notes, "with OPEC on the sidelines, oil prices face their greatest threat since 2009 and appear on track for an extremely volatile 2015"

• Welcome to the recovery:
  • Euro zone warning hits stocks, currency as oil plumbs depths (Reuters)
  • Japan GDP Worse Than Initially Reported (WSJ)
  • China trade data well below expectations (BBC)
  • German industrial production frustrates forecasts (FT)
• Oil Extends Retreat With European Stocks as Dollar Gains (BBG)
• California police, protesters clash again after 'chokehold' death (Reuters)
• Ruble’s Rout Is Tale of Failed Threats, Missteps (BBG), not to be confused with "Yen's Rout Is Tale Of Keynesian Success, Prosperity"
• Uber banned from operating in Indian capital after driver rape (Reuters)

Without doubt, the most memorable line from the latest quarterly report by the BIS, one which shows how shocked even the central banks' central bank is with how perverted and broken the "market" has become is the following: "The highly abnormal is becoming uncomfortably normal.... There is something vaguely troubling when the unthinkable becomes routine." Overnight, "markets" did all in their (central banks') power to justify the BIS' amazement, when first the Nikkei closed green following another shocker of Japanese econ data, when it was revealed that the quadruple-dip recession was even worse than expected, and then the Shanghai composite soaring over 3000 or up 2.8% for the session, following news of the worst trade data - whether completely fabricated or not - out of China in over half a year.

Much has been said about Goldman's control over the most important Federal Reserve of all, that of New York, where the all important Markets Group is located, which does as the name implies, "influences" markets.And while it is very clear by now that nothing will change under the current corrupt and compromised executive, legislative and judicial system, because at the end of the day, Goldman has indirect control over all three branches of government , here is the one anecdote which, in a non banana republic, would be the straw that finally broke the camel's back.

• JP Morgan 200K
• Goldman Sachs 220K
• Citigroup 225K
• HSBC 230K
• UBS 230K
• Credit Suisse 235K
• Morgan Stanley 235K
• Deutsche Bank 250K

• Marchers again swarm New York to protest death at hands of police (Reuters)
• N.Y. Police Chokehold Evidence to Stay Secret as Protests Spread (BBG)
• Obama to announce choice of Ash Carter for defense chief Friday: White House (Reuters)
• Boehner vows to avoid government shutdown with help from Democrats (Reuters)
• Brent Heads for 5-Year Low as Saudi Discounts Spur Competition (BBG)
• Will Cheap Oil Lead to Big Mergers? (WSJ)
• Bank of Russia Ramps Up Ruble Support (WSJ)
• China Bad-Loan Level Seen Understated After Economy Slows (BBG)
• Uber Snags $41 Billion Valuation (WSJ)

“There’s two things that I find incredible about this. First, that anyone would advertise in a resume that they know about a flaw in the system — signaling that they’re ready and willing to exploit that flaw. And, second, that somebody would hire the person sending that signal.”

• Fall of the Bond King: How Gross Lost Empire as Pimco Cracked (BBG)
• Hong Kong 'Occupy' leaders surrender as pro-democracy protests appear to wither (Reuters)
• Ashton Carter, Ex-Pentagon No. 2, Emerges as Obama Favorite for Defense Secretary (WSJ)
• Oil, the Ruble and Putin Are All Headed for 63. A Russian Joke -- for the Moment (BBG)
• New U.S. oil and gas well November permits tumble nearly 40 percent (Reuters)
• Swedish government on brink of collapse (AJ)
• China says Britain has no moral responsibility for Hong Kong (Reuters)
• Indian Labs Deleted Test Results for U.S. Drugs, Documents Show (BBG)

Our nations (Western nations) are rapidly going bankrupt. This is not a suggestion or an assertion. It is a simple fact of arithmetic, for anyone capable of operating a calculator, and who can understand the concept of “compound interest”. Indeed, the bankruptcy of these already-insolvent regimes has only been delayed via permanently (fraudulently) keeping interest rates frozen at near-zero – to minimize their already gigantic interest payments.

Giant Banks Take Over Real Economy As Well As Financial System … Enabling Manipulation On a Vast Scale

Central bankers reached a new low overnight when Swiss National Bank President Thomas Jordan warned of "disastrous consequences" from a pulpit in a church on a historic hill in the town of Uster, Switzerland, which Bloomberg dubbed the 'sermon on the hill.' "Hungry people don't stay hungry for long, they get hope from fire and smoke as they reach for the dawn..."

On one hand, the US middle class has rarely if ever had it worse. At least, if one actually dares to venture into this thing called the real world, and/or believes the NYT's report: "Falling Wages at Factories Squeeze the Middle Class." In short, it says that America's manufacturing sector, and thus middle class, is being obliterated: "A new study by the National Employment Law Project, to be released on Friday, reveals that many factory jobs nowadays pay far less than what workers in almost identical positions earned in the past. And then, paradoxically, at almost the same time, there's this from Bloomberg: "Lower-wage workers saw bigger pay gains over the past year than the highest earners, reversing the trend from earlier stages of the recovery." In short: the state of the US middle class is truly in the eyes of the beholder.

• Grand jury expected to resume Ferguson police shooting deliberations (Reuters)
• PBOC Bounce Seen Short Lived as History Defies Bulls (BBG)
• Home prices dropped in September for the first time since January (HousingWire)
• UPS Teaches Holiday Recruits to Fend Off Dogs, Dodge NYC Taxis (BBG)
• US oil imports from Opec at 30-year low (FT)
• Hedge Funds Bet on Coal-Mining Failures (WSJ)
• Putin Woos Pakistan as Cold War Friend India Buys U.S. Arms (BBG)
• How the EU Plans to Turn $26 Billion Into $390 Billion (BBG)
• The $31 Billion Bet Against Brazil’s New Finance Minister (BBG)