Portugal

Later this month, the supreme court of Mexico will review the country’s current prohibition of marijuana, as well as the possibility of legalizing the plant for medical and recreational use. Medical marijuana is currently legal in Mexico, but the black market drug trade in the country continues to cause widespread violence, drug cartel, and gang activity, just as it does in America.

26 years ago, today was envisioned as day when cars flew, holographic movies were box office hits, hoverboards roamed, and people were fired by fax. None of the happened. Instead the only "back to the future" moment this morning is a deja vu one we have seen every day for the past 7 years: bad economic news leading to surging stocks.

“In an as-yet unreleased statement circulated to the BBC, myself and others, the UN Office on Drugs and Crime (UNODC), which has shaped much of global drug policy for decades, call on governments around the world to decriminalise drug use and possession for personal consumption for all drugs.”

In the beginning of 2008, a US dollar could buy only €0.65 euros. Today, on average through 2015, one US dollar can buy €0.91 euros. With European demographics getting more challenging by the year, and deflation stalking the eurozone, problems don’t seem to be going away for the euro. The crises in Ukraine and Greece continue on without much resolved, and the ECB is continuing on with its QE program. Meanwhile, the Refugee Crisis has created another political distraction that has its own challenges for the people of Europe. Will the shrinking euro be able to revert its course, or is Europe doomed to become the next Japan?

Following more than a year in which Netflix pulled an Amazon quite successfully, burning through tens then hundreds of millions in cash but promising ever loftier growth, moments ago the magic finally ended, when Reed Hastings' company reported Q3 revenue of of $1.581 billion, wildly missing not only consensus expectations of $1.75 billion, but its own Q2 forecast of $1.593 billion, while also missing the bottom line estimate of $0.08, generating just 7 cents in Earnings.

For the past two weeks, the thinking probably went that if only the biggest short squeeze in history and the most "whiplashy" move since 2009 sends stocks high enough, the global economy will forget it is grinding toward recession with each passing day (and that the Fed are just looking for a 2-handle on the S&P and a 1-handle on the VIX before resuming with the rate hike rhetoric). Unfortunately, that's not how it worked out, and overnight we got abysmal economic data first from China, whose imports imploded, then the UK, which posted its first deflation CPI print since April, and finally from Germany, where the ZEW expectation surve tumbled from 12.1 to barely positive, printing at just 1.9 far below the 6.5 expected.

"Europe has seen nothing like this for 70 years – the visible expression of a world where order is collapsing. The millions of refugees fleeing from ceaseless Middle Eastern war and barbarism are voting with their feet, despairing of their futures. The catalyst for their despair – the shredding of state structures and grip of Islamic fundamentalism on young Muslim minds – shows no sign of disappearing. Yet there is a parallel collapse in the economic order that is less conspicuous: the hundreds of billions of dollars fleeing emerging economies, from Brazil to China, don’t come with images of women and children on capsizing boats."

The market is prone to temporary fits of shared enthusiasm – for emerging-market debt, for Internet stocks, for residential mortgage-backed securities, for Greek government debt. Traders need not wait to see when or whether the profits materialize. IBGYBG, they say – I’ll be gone, you’ll be gone. There are numerous routes to bezzle and febezzle...  traders borrowed money from the future. And then the future came, as it always does, turning the bezzle into a bummer.

News That Matters

News That Matters

• MOAR: Euro-Area Growth Seen Slowing in Sign More Stimulus May Be Ahead (BBG)
• MOAR: Japan's wage growth slows in August, keeping pressure on BOJ for more stimulus (Reuters)
• MOAR: Stocks, Copper, Emerging Markets Jump as Fed Delay on Rates Seen (BBG)
• And yet... Central Banks Lose Bond-Market Credibility as Woes Mount (BBG)
• World Bank cuts Asia growth forecast on China and US rates (BBC)

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 results from Portugal's elections are beginning to trickle in and according to exit polls, Coelho's coalition has prevailed. According to Bloomberg, the ruling coalition of Prime Minister Pedro Passos Coelho has won 38%-43% of vote and 108-116 seats.

Despite the arguably undemocratic, obfuscating nature of our nation’s campaign finance laws and the blatant corporatist agenda mandated by the Supreme Court, let’s attempt to break down the major sources of political spending so far in the 2016 presidential election. You may be surprised to find out who is donating money to your candidate — and how that contribution may affect future policy positions.

CATALAN SEPARATISTS CLOSE TO 50% OF VOTES: EXIT POLL