Goldman Sachs

Doing as Yellen and her counterparts demand is the biggest risk of all. The Yellen Doctrine requires that central banks be both correct and able, abilities that have been (and can only be) in utter short supply. Her view would show more proactive and effective central bank management where only reactive and impromptu, last minute white-knuckling has abounded. Central banks have been in the past year only holding on for dear life, which is where obscurity has been their benefit. In the end, however, it will bring about their own downfall as it only serves to make matters worse. Yellen wants the central bank to be viewed as almost godlike, but they continually reveal themselves weak, deceptive and ineffectual; eschewing all long run sustainability in order to just make it through one day at a time.

...more Venzuelans than Americans believe their children's financial futures will be more secure than their own...

With a birth-rate at record-lows and death-rate at record-highs, Japanese PM Shinzo Abe unveiled a new set of 'arrows' a few weeks ago to 'fix' the demographic disaster the nation faces. At the time, Abe was long of "bold proposals" but short of actual policies to encourage the nation to make more babies (despite dwindling interest in sex). As Bloomberg reports, here are a number of options that Abe's new minister for demographics Kato could introduce to slow the downward spiral of population...

Tomorrow morning Mario Draghi is widely expected to if not announce an extension, or expansion, of the ECB's QE program, than to at least jawbone sufficiently, and push the EURUSD lower from its recently anchored level in the 1.10-1.20 range. But what are the specifics of Draghi's announcement: will he merely expand the monetization limit per security, as he did in early September, will he increase the universe of eligibile securities, or will he simply extend the maturity of the non-open ended QE from September 2016 to some indefinite date? The following list, courtesy of Bloomberg, summarizes what the sellside universe believes Draghi will unveil in just under 12 hours.

Much like the NBS will obscure any weakness below 7% in China’s GDP data, the PBoC will do “whatever it takes” (central bank pun fully intended) to make sure the market doesn’t get wind of the fact that there’s still a tremendous amount of pressure in terms of capital outflows. As Bloomberg reports, "The People’s Bank of China and local lenders increased their holdings in onshore forwards to $67.9 billion in August, positions that would boost China’s currency against the dollar. The amount is five times more than the average in the first seven months."

"Then tell me, future boy, who's President of Brazil in 2016? Then who's vice president?"

On the basis of the fundamental economic backdrop, Goldman Sachs sees VIX fair-value at least 19, with low-teens more consistent with ISM in the upper 50s (not the current sub-50 levels). However, credit (and FX) protection markets imply significantly more risk ahead with CDX HY stalled at 2month lows (while VIX hits 3 month lows). Given historical relationships, credit markets suggest a VIX of 25 is more consistent with reality (especially as Skew tail risk rolls down to normal risk).

The second tech bubble, one which has seen nearly 200 tech "unicorns" rising out of the ZIRP ashes in the past few years and promptly attaining valuations of over $1 billion, is bursting. WSJ reports that investment bankers cautioned Dropbox that the San Francisco company might be unable to go public at its latest private round "valuation" of $10 billion.

When just days after Yum! Brands saw its biggest earnings disappointment in years sending its shares cratering following Chinese results which cames orders of magnitude below expectations and leading to a major guidance cut, it appointed Icahn protege, activist investor Keith Meister to its board, many speculated that some major spin-off, or split of the company's China facing assets, was just a matter of time. And so it was, less than a week to be precise. Moments ago Yum! Brands announced its intention to split into two companies creating a publicly traded Yum! China or ("Bad Yum") which will contain the ongoing Chinese weakness, while keepping legacy Yum! Brands.

After yesterday's closing ramp "prudently" just ahead of an abysmal IBM earnings report with the lowest revenues since 2002, and the latest rally in capital markets which sent European stocks to their highest level since August on the back of a barrage of global bad data which has unleashed the Pavlovian liquidity dogs screaming for moar central bank bailouts, this morning has seen a modest decline in the Stoxx 600 driven by energy names, while S&P500 futures are set to open lower on IBM's disappointment at least until the latest massive BOJ USDJPY buying spree sends the pair to 120 and the S&P solidly in the green. The biggest political event overnight was the Canadian election, where Trudeau's liberals swept PM Harper from power, capping the biggest political comeback in the country's history; the Canadian dollar is largely unchanged after initially weakening then rising.

The key overnight event was the much anticipated, goalseeked and completely fabricated Chinese economic data dump, which was both good and bad depending on who was asked: bad, in that at 6.9% it was below the government's 7.0% target and the lowest since Q1 2009, and thus hinting at "more stimulus" especially since industrial production (5.7%, Exp. 6.0%) and fixed spending also both missed; it was good because it beat expectations of 6.8% by the smallest possible increment, and set the tone for much of Europe's trading session, even if Asia shares ultimately closed largely in the red over skepticism over the authenticity of the GDP results. Worse, and confirming the global economy is now one massive circular reference, China accused the Fed's rate hike plans for slowing down its economy, which is ironic because the Fed accused China's economy for forcing it to delay its rate hike.

· ECB rate decision and press conference is set to take place on Thursday, with participants looking for indications as to if and how the central bank’s QE programme may be expanded

· US earning season continues next week, with high profile names including IBM, Alphabet, Amazon.com, Morgan Stanley and Bank of New York Mellon all scheduled to report

It was clear what was about to happen in Syria only because we understood one important fundamental – that there are no “sides” in any modern conflict, only proxies fighting on a global chessboard controlled by the same elitist interests. Syria represented a perfect catalyst for a planetary scale conflict triggered between East and West in a way that could divert attention from internationalists. Modern war, whether through kinetics or economics, is almost always theater designed to distract and terrorize the masses, which are the true target of any conflagration.

Just because no one has ever manipulated, fixed, or otherwise rigged any markets yet, doesn’t mean they won’t try, which why it’s nice to know that honest firms like Goldman are on the job when it comes to watching for any kind of nefarious shenanigans.