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News That Matters

This. Will. Not. End. Well. As WSJ reports, "retailers such as Kmart and Office Depot this week are starting to roll out cards that give the recipients small amounts of stock in some of the country’s best-known companies." "I have always wanted to get into the stock market business, but I honestly don’t have the time to explore what’s going on in the market trends of the day"...

Major Chinese telecom supplier Fu Chang Electronic Technology Co. (also known as Fosunny), shocked its 3,800 employees when  instead of going public, the company announced it would be going dark instead when it issued a statement saying it was ceasing operations due to liquidity problems resulting from legal and debt issues.

The latest BAC credit and debit card spending data is out and it is not pretty, and not just for the mid-level consumer who, as documented previously, has been tapping out ever since April as the following Gallup consumer spending chart shows but also for the high-end.

• Global stocks eye biggest rally in four years on Fed relief (Reuters)
• FOMC Minutes Sap Confidence in Fed's 2015 Rate Hike Resolve (BBG)
• Glencore to cut annual zinc production by a third (FT)
• Tea Party wave that lifted Republicans threatens to engulf them (Reuters)
• Why Kevin McCarthy Came to Quit Speaker Race (WSJ)
• A U.S. Recession Just Got a Little More Likely (BBG)

• Endangering national security, leaking state secrets, subverting the government, and undermining national unity;
• Inciting ethnic hatred or ethnic discrimination, and undermining national unity;
• Spreading rumor, disturbing social orders, undermining social stability;
• Spreading obscenity, pornography, gambling, violence, murder, terrorism or instigating others to commit crimes;
• Insulting or slandering others, infringing upon the legal rights and interest of others;

• How Iranian general plotted out Syrian assault in Moscow (Reuters)
• China FX reserves post record quarterly fall as cenbank steps up yuan support (Reuters)
• MSF calls for independent inquiry into U.S. attack on Afghan hospital (Reuters)
• Yen Advances as Bank of Japan Refrains From Adding to Stimulus (Reuters)
• Abu Dhabi Said to Explore Asset Sales After Slump in Oil Price (BBG)
• U.S. Oil Approaching $50 Boosts Stocks as Emerging Markets Surge (BBG)

• Asian shares rise on fading Fed rate views (Reuters)
• U.S. Equity Futures Fall, Risking S&P 500 Rally as Copper Slides (BBG)
• More biotech pain, this time from the WSJ: For Prescription Drug Makers, Price Increases Drive Revenue (WSJ)
• VW Will Delay or Cancel Non-Essential Investments Due to Scandal (BBG)
• Russia Rejects No-Fly Zone Over Syria as Clerics Urge Reprisals (BBG)
• Historic Pacific trade deal faces skeptics in U.S. Congress (Reuters)
• German Factory Orders Unexpectedly Fall Amid Economic Risks (BBG)

Following Friday's disastrous payrolls report, which confirmed all the pre-recessionary economic data and signaled that instead of approaching "lift-off" and decoupling from the rest of the world, the US economy is following the emerging markets into a slowdown in what may be the first global, synchronized recession since 2008, the market saw its biggest intraday surge since 2011 and the sharpest short covering squeeze in history, we are happy to announce that the "market" is now solidly back in "bad news is good news" mode.

The 30 stocks of the Dow Jones Industrial Average currently trade for an average of 14.8x next year’s consensus earnings.  But... Everyone knows Wall Street analysts are always too optimistic, so what if we just look at the lowest estimate for each company? The driver of market pessimism sits at the top of the income statement – the Street’s worst case revenue estimates call for a decline of 1.7% in 2016.  Now, Q3 earnings season is unlikely to provide much comfort here; why should corporate managements go out on a guidance limb when their stocks are down on the year?  All this points to further volatility in October, and with a bias to the downside.

• U.S., Allies Demand Russia Stop Attacks on Syria Opposition (BBG)
• Russian Airstrikes Defend Strategic Assad Regime Stronghold on Syria’s Coast (WSJ)
• Emerging Stocks Head for Weekly Advance Before U.S. Jobs Data (BBG)
• Wage Strife Clouds Car-Sales Boom (WSJ)
• Oregon town reels from classroom carnage (Reuters)
• Oregon shooter came from California, described as shy and skittish (Reuters)

The unforeseen consequences of the advent of electric cars will reverberate much farther than the demise of dealerships and significant shifts in market share in the auto industry.

News That Matters

"Under U.S. law - the law that, not coincidentally, governs most of the world’s largest online platforms - intermediaries such as Twitter and Facebook generally can’t be held responsible for what people do on them. But the United Nations proposes both that social networks proactively police every profile and post, and that government agencies only “license” those who agree to do so." Interestingly, it appears Apple and Facebook want to get ahead of the curve and begin censoring news the U.S. government might find embarrassing right away.