Daimler

• Stock futures little changed as Yellen comments awaited (Reuters)
• Draghi stimulus hint underpins stocks, knocks euro (Reuters)
• Black Friday's Losing Its Mojo and Retailers Might Be Relieved (BBG)
• Macy’s Fights Downward Spiral With Bet on Off-Price Backstage Stores (WSJ)
• Greece Comes to a Standstill as Unions Turn Against Tsipras (BBG)
• Euro zone production falls more than expected in September (Reuters)
• Valeant played a key role in building, operating Philidor RX (Reuters)

Once again, the two major macroeconomic announcements over the weekend came from China, where we first saw an unexpected, if still to be confirmed, increase in FX reserves, and then Chinese trade data once again disappointed tumbling by 6.9% while imports plunged 18.8%. So how did the market react? The Shanghai Composite Index rose for a fourth day and reached its highest since August 20because more bad data means more easing from the PBOC, and just to give what few investors are left the green light to come back into the pool, overnight Chinese brokers soared after Chinese IPOs returned after a 5 month hiatus. Elsewhere, Stocks and currencies in emerging markets slump on prospect of higher U.S. borrowing costs before year-end and after data underscored slowdown in Asia’s biggest economy. Euro strengthens.

"VW is leaving us all speechless."

“This can get pretty ugly.”

In a "world of disappointments", where beta is king and where alpha has become a joke (or, now that equity is a risk-free asset and debt is risky, is outright punished) where growth no longer exists, drowning under the weight of $200 trillion in debt, and where value strategies have been all but forgotten replaced instead with "stories" about companies that have no cash flows but just might be "the next big thing" (one day), what should one to do? Why, engage in the most idiotic of strategies: chase momentum.

Yesterday morning, when previewing the day's tumultuous events, we said that "Futures Are Firm On Hope Draghi Will Give Green Light To BTFD." And boy did Draghi give a green light, that and then some, when his press conference unleashed one of the biggest one-day US equity rallies in 2015. This morning it has been more of the same, with global market momentum on the heels of Draghi's confirmation that Europe's economy is again backsliding (it's a good thing, if only for stocks), leading to momentum for US equity futures, which together with soaring tech/cloud, earnings if no other, are on their way to take out recent all time highs.

After yesterday's dramatic late day market rout catalyzed by the tumble in the biotech sector in general, and Valeant in particular, and foreseen in its entirety by Gartman who went bullish just hours before, this morning US equity futures and European stocks have recouped some losses on the recursive, and traditional, hope that Mario Draghi will say something to push risk higher when he speaks in 2 hours at the ECB's press conference in Malta. And yet, just like Yellen a month ago, Draghi faces the paradox of reflexivity that after years of being ignored, is the "new thing" in town: how does he intervene and demonstrate he is readier than ever to set up stimulus, without panicking investors over euro area’s health.

It is a generally quiet week on the economic front, with updates mostly on the housing front where following today's euphoric NAHB Housing Market Index, we have housing start and permits, blaims and existing home sales. Elsewhere, Fed speakers continue to speak, with Lacker, Dudley (again) and Powell confusing traders once more. The big news this week is earnings as some of the most prominent companies report, including IBM, Verizon, GM, Ebay, Coke, Boeing, Amazin, AT&T, CAT, Microsoft and P&G.

The scandal swirling around Germany's largest listed company had its beginnings in an attempt to crack the U.S. market, the missing link in VW's global footprint. But, as Handelsblatt details, what began as expansion ended in deception (piecing together the events that led up to the scandal, based on the facts as they are currently known).

European equity have been weighed on by BMW after reports in German press that the Co.'s emission tests for their X3 model could show worse results than that of the Volkswagen Passat. The Norwegian and Taiwanese central banks have both cut interest rates, taking the number of central banks to cut rates this year to 40. Today's highlights include US weekly jobs data and durable goods orders as well as comments from ECB's Praet and Fed's Yellen. Of note US data, including jobless claims, durables and home sales will be delayed today & not released to newswires 1st due to Pope's visit

In many ways, the overnight market has so far been a reversal of yesterday, when a stable Asia session (with China stocks rising) gave way to a European tumble which in turn dragged the US lower.

• China stocks resume sharp slide as economic worries mount (Reuters)
• OECD head says sees further cut to global growth forecasts (Reuters)
• The U.S. Dollar Is Gaining Like It's the 1980s — For Better or Worse (BBG)
• Glencore Slumps to Record Low, Erasing Gains Since Debt Plan (BBG)
• Woman killed, 400 homes destroyed by California wildfire (Reuters)
• Why Morning Is the Worst Time to Trade Stocks (WSJ)
• German Investor Confidence Damped by Weaker Emerging Markets (BBG)

News That Matters

Before China’s bursting equity bubble grabbed international headlines, and before the PBoC’s subsequent devaluation of the yuan served notice to the world that things had officially gotten serious in the global currency wars, all anyone wanted to talk about when it came to China was a "hard landing." Now that the yuan devaluation has all but proven that China has landed, and landed hard, here are the five channels of contagion.

With everyone now focused on what China's daily Yuan fixing will be ever night, there was some confusion why last night the PBOC decided to devalue the CNY by another 1.1% to 6.4010, despite its promise that the devaluation would be a "one-off" event, taking the 3 day devaluation to just about 4.5%. However, subsequently in a press conference, central bank vice-governor Yi Gang said that the PBoC will continue to step in when the market is ‘distorted’, that there is no economic basis for the Yuan to fall continuously and that it will look to keep the exchange rate ‘basically stable’. The Vice-Governor also said that the PBoC will closely monitor cross-border capital flows and that reports suggesting the Central Banks wants to see the currency depreciate 10% are ‘groundless’. Which is ironic considering after just 3 days, the PBOC is already half the way there!