Barclays

• Central Bankers Urge Fed to Get On With Interest-Rate Increase (WSJ)
• Bond Market Casualties Leading Biggest S&P 500 Revival Since '11 (BBG)... on hopes of more easing
• U.S. Patrols to Test China’s Pledge on South China Sea Islands (WSJ)
• Merkel Under Fire: German Conservatives Deeply Split over Refugees (Spiegel)
• Assault Weapons Ban Before U.S. Supreme Court (NBC)
• Hedge Funds Are Playing 'Dangerous Game' With Copper (BBG)

Just when you thought the M&A boom is over after a surge in bond yields that Goldman has repeatedly dubbed as "recessionary", and which will make the debt cost of any funding so high that there is barely any room for execution error, moments ago as had been extensively leaked previously, private Dell announced it would acquire tech giant EMC in a deal valued roughly $67 billion, while maintaining VMWare as a publicly-traded corporation. Good luck with raising the tens of billions in debt the deal will require: our best wish to Barclays, BofA, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan, RBC who will all be underwriting the required debt financing to Dell.

This past week saw the markets rebound off their lows which has brought the "bulls" rushing back claiming the correction is over. However, is that really the case?

WTI Crude is back above $50 to its highest in almost 3 months following a 10%-plus gain on the week (the 2nd best since Jan 2009). This surge has sparked the biggest surge in European and US Oil & Gas stocks since 2008 as Bloomberg notes, output from the world’s biggest consumer drops and Shell and PIMCO claim the worst may be over (while Goldman sees "lower for longer" suggesting this rally is a squeeze). However, while Energy stocks and raw materials are soaring, credit markets remain notably less impressed.

"We are still in a very cautious environment for emerging-market currencies and unless there is a sharp turnaround in commodity prices or capital flows, I still think there’s going to be pressure on the ringgit and the rupiah."

Overnight Barclays looked at the link between the current state of corporate profits, plunging by 60bps, and the broader economic cycle. It used data set stretching to the last seven business cycles, dating back to 1973, and found that on 5 out of 6 occasions, such a drop in margins resulted in a recession. In Barclays' own words: "the results are not encouraging for the economy or the market."

News That Matters

· BoJ, RBA and BoE are all set to announce their latest rate decision this week, while the FOMC will release the minutes from their September meeting

· Alcoa unofficially kick off earning season on Wall St., with analysts forecasting the first Y/Y EPS decline since 2009

"It is not a problem of liquidity, but of fundamentals"...

• 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)

With China markets closed for holiday until the middle of next week, and little in terms of global macro data overnight (the only notable central banker comment overnight came from Mario Draghi who confidently proclaimed that "economic growth is returning" which on its own is bad for risk assets), it was all about the USDJPY which has seen the usual no-volume levitation overnight, dragging both the Nikkei higher with it, and US equity futures, which as of this moment were at session highs, up 7 points. The calm may be broken, though, as soon as two hours from now when the September "most important ever until the next" payrolls report is released.

As Bloomberg reports, "JPMorgan Chase & Co. is set to pay almost a third of a $1.86 billion settlement to resolve accusations that a dozen big banks conspired to limit competition in the credit-default swaps market, according to people briefed on terms of the deal."

• Commodities in crisis as Asian shares tumble and shipper files for bankruptcy (Reuters)
• Global Rout Eases as S&P 500 Futures Advance With Oil, Glencore (BBG)
• Chinese Stocks Decline Most in a Month in Hong Kong on Economy (BBG)
• India cuts interest rates by more than expected (BBC)
• Glencore Rebounds as $50 Billion Plunge Is Seen as Excessive (BBG)
• How Congress May Have Saved Goldman Sachs From Itself (BBG)

Unlike previous gold probe cases, this one will have major consequences. How do we know? Because just like in LIBOR-gate, just like in FX-gate, it is the biggest rat of all, Swiss megabank UBS, that is about to turn on its former criminal peers.  As Bloomberg reported earlier "UBS was granted conditional leniency in Swiss antitrust probe of possible manipulation of precious metal prices." Why would UBS do this? The same reason UBS did so on at least on two prior occasions: the regulators have definitive proof it is involved, and gave it the option to turn evidence and to rat out its cartel peers, or face even more massive financial penalties. UBS, as usual, choice the former.

• Headline winner: "Read Beyond Massive Job-Cuts Headlines: Labor Market Is Fine" (BBG)
• And speaking of lies: The More Yellen Talks Up Inflation, the Less Traders Believe Her (BBG)
• How Some Investors Get Special Access to Companies (WSJ)
• Victorious Catalan separatists claim mandate to break with Spain (Reuters)
• Russia seizes initiative in Syria (Reuters)
• Former VW boss Winterkorn investigated for fraud (Reuters)
• Investors Pull Back From Junk Bonds (WSJ)