Viernes 11/09/15 Precios de los productores

[Fenix]

Crude Jumps After Biggest 2-Week Rig Count Decline In 4 Months
Submitted by Tyler D.
09/11/2015 - 13:09

With Saudis blowing off an OPEC leaders meeting, Iran slashing prices to 3 year lows inventories rising rapidly but US production dropping quickly, and Goldman calling for $20 oil possible, it has been a busy (and mixed) week for oil news. Add to that the seasonal lull amid refinery slowdown/repairs and Today's 10 rig drop in US oil rig count to 652 (following last week's 12 rig drop) is the biggest 2-week drop in 4 months just adds to the noise with Texas rig count dropping most (-9 to 366). Crude prices are rising modestly as US rig count drops back to 2-months lows.




Last Thing The Fed Sees Before Its Rate Hike Decision Will Be Very Ugly
Submitted by Tyler D.
09/11/2015 11:26 -0400

Earlier this week we warned that based on the latest Gallup poll of some 15,000 US shopping adults (and thus far more accurate than the Department of Commerce seasonally adjusted, goal-seeked retail sales data), retail spending in August will be a stark disappointment to those once again holding off for a rebound in that all important driver for the US economy - consumer spending. As we showed, August spending was the weakest in nominal dollar terms since 2012...



... and was also the lowest since March, as a result of 4 consecutive months of y/y spending declines.



Earlier today, Bank of America confirmed just that using its internal data, which tracks aggregate spending on credit and debit
cards, showing that consumers reduced spending in August.

And they reduced it substantially: According to the Bank, while the drop was not as pronounced as what Gallup reported (which saw average daily spending slide from $91/day to $89/day), it was still enough to dramatically impact the economy: "our headline measure, retail sales ex-autos, plunged 0.8% mom seasonally adjusted."

The weakness was not focused geographically, and was widespread across the nation:



As BofA notes, "there was broad weakness in retail sales ex-autos and gas spending growth across metropolitan areas, with seven of the ten largest MSAs showing a monthly decline. The biggest monthly decline was in Dallas, followed by Miami and San Francisco. Both Dallas and San Francisco have experienced strong growth over the prior six months, showing a solid recent trend."

What could be causing this at the aggregate level? One explanation is far weaker than expected back to school sales:

Retail sales in August are typically boosted by back-to-school shopping. Our proxy for back-to-school sales, which includes teen retail stores, sporting goods and categories within electronic stores and school supplies, was up 2.6% yoy on a seasonally adjusted basis. But this is a slowdown from the past few years and consistent with the slower yoy trend in retail sales ex autos and gas (Chart of the month).



The late timing of the Labor Day holiday may have created a downside bias to back-to-school sales this August. Many schools start after Labor Day, which may push back-toschool sales from August to September. Indeed, the seasonal factor for our back-to-school composite seems particularly large this year given the notable adjustment in the timing of the Labor Day holiday to the 7th of September this year from the 1st last year.

Some more details:

* Sales at teen retailers declined 1.3% mom in August on a seasonally adjusted basis, based on the aggregate BAC card data. This left sales down 6.2% yoy, continuing the weak trend over the past few years.
* The weak performance of teen retailers in August is an indication of a sluggish back-to-school shopping season
* Spending at sporting goods stores inched up 0.2% mom SA. This left the trend positive with an increase of 2.0% yoy.
* Budget constrained households continue to direct spending to on-trend athletic apparel (“athleisure”), which is gaining share at the expense of casual apparel.



The weakness was most pronounced at department stores, where sales fell 0.2% M/M and tumbled 3.5% Y/Y. While this is not a new trend and indicates the shift away from bricks and mortar to online vendors, the lack of any improvement merely confirms the broad weakness in consumer spending in the past month.

Finally, as Bank of America reiterates our conclusion from earlier this week when we observed precisely this only with Gallup poll data, "the weakness in the August BAC data suggests a high risk for softness in the Census Bureau advance retail sales report given that the two measures trend closely. While we know that the retail sales figures are volatile and subject to revisions, it is hard to ignore a weak report."

Why is all of the above particularly important? Because with the August Retail Spending report due out the morning of September 15, it will be the last report on the economy the Fed will read ahead of its "most important if not ever then surely in the past decade" FOMC meeting starting on September 16, and concluding with the 2pm announcement on September 17.

Following today's plunge in consumer confidence (which as a reminder Bill Dudley warned two weeks ago he will be very closely watching ahead of the FOMC meeting) and what is set to be a big drop in the retail spending report next Tuesday, will Yellen really be "data-dependent" if she hikes just as the economy is rapidly downshifting, not to mention the US consumer is about to tap out once again?

If nothing else, the "Dow-dependent" Fed now has a very clear "data" out to delay its September rate hike by at least 3 months, even if the actual delay driver has nothing to do with the US economy whatsoever.

[Fenix]

This Is Another "Subprime" Waiting To Blow
09/11/2015 12:17 -0400
Submitted by Bill Bonner
This is getting interesting again.

If it is just “volatility,” as Wall Street’s shills in the press maintain, it will probably pass soon. Everything will be okay. Back to routine imbecility before the end of the month.

But if these whipsaw movements are heralding a bear market, U.S. stock prices could be cut in half… or more.

And they may not recover for 10 to 20 years. (Catch up on the details of our bear market forecast here.)
Bull or Bear?

Which is it? Bull or Bear?

No one knows, of course. But it looks to us as though the whole shebang is getting ready to collapse.

So far, the correction has trimmed $12.5 trillion off the value of global stock markets. There are a few reasons for stocks to go back up… and many reasons why they might want to go down further.

The 2008 global financial crisis was centered on mortgage debt. There was too much of it that couldn’t be repaid. When the value of the collateral – homes – headed down, the bubble popped.

Today, consumers have about the same amount of debt. But now the excesses are in auto loans and student debt.

As you can see below, total auto loans stood at about $781 billion in 2007. Today, they’ve topped $1 trillion.

And student loans have more than doubled over that time to $1.3 trillion.

091015 DRE Student and Auto Loan Debt Chart



Again, the collateral is falling in value.

* Used-car prices fall, as leases expire and more used cars hit the market.
* As for student debt, the “collateral” is the earning power of the person who borrowed the money.

And here’s a hint of what is happening to that. According to the Center for Immigration Studies, all of the net gains in jobs since 2007 have gone to immigrants – both legal and illegal.

And the vast majority of those jobs have been gained in the hospitality industry – waiters, greeters, busboys, etc. (low-wage jobs).

That’s why student loan default rates are soaring. The “collateral” isn’t as good as lenders thought it was.
A Mountain of Maturing Debt

But today, we’re going to look at corporate debt, which has risen to $5.2 trillion from $3.2 trillion in 2007…

As we’ve been reporting, C-suite cronies have been taking advantage of the Fed’s ultra-low rates to borrow money… buy back shares in their own companies… and pay themselves fat bonuses as the remaining shares go up in price.

(When corporations buy back shares, they cancel them. This automatically raises the earnings per share of the outstanding shares and increases their value.)

But that scam could be about to come to an end. Reports the Financial Times:

With a $4 trillion mountain of debt maturing over the next five years, corporate America’s reliance on cheap cash is about to get tested.U.S. corporate treasurers have rushed to lock in cheap borrowing costs in advance of the expected rate rise, refinancing more than $1 trillion each year between 2012 and 2014, according to Standard & Poor’s.



Tighter borrowing conditions will mark a turning point in the recent debt binge. Companies have had easy access to cash to write checks for multibillion-dollar takeovers, to fund buybacks and dividend strategies – all welcomed by investors as share prices rallied off 2009 lows.



But as rates turn higher, investors may see the flip side of cheap financing. Analysts warn companies will begin defaulting in greater numbers, particularly in the energy sector, which has found itself in the line of fire as commodity prices languish.

Rotting Fruit

You will hear from the talking heads that America’s corporate sector has never been in better shape.

But like a peach, the fruit never looks better than just before the rot sets in.

Here’s what really happened…

Thanks to a generous Fed, since the financial crisis hit, companies have been able to borrow at interest rates so low you need to get on your hands and knees to find them.

And they used much of this borrowed money to boost their share prices via buybacks.

Hey, presto! The trick is done right in front of our eyes.

Stock prices rise. And as stock prices rises, companies’ debt-to-equity ratios – which show how much debt they are using to finance growth relative to the value of their shareholders’ equity – improve.

The companies may have more debt… but they have a higher share price to justify it.

When the mortgage debt bubble blew up in 2007, it was the weakest segment – subprime – that detonated first. It will be no different in the corporate sector.

Here’s the FT again, on subprime corporate debt:

Moody’s and S&P warn that defaults are likely to increase in the coming years as interest rates rise, a concern echoed by bond funds such as Pimco.Analysts with S&P expect defaults among junk-rated U.S. companies to hit 2.9% by June 2016, nearly twice the rate in 2013.



Moody’s list of companies rated B3 with a negative outlook or lower – its lowest rating rungs in the “speculative” space – eclipsed 200 for the first time since 2010 in July.

Corporate earnings have started to plateau this year. And share prices are no longer steadily rising as they have been since the last bear market bottomed in 2009.

What happens when lenders are no longer willing to extend credit to corporations?

We know exactly what happens – because it happened twice before in this century.

In the run-up to the 2000 and 2008 stock market peaks, stock prices rose… and the fruit looked juicier and juicier.

Then credit collapsed… stock prices plunged… and things headed back to a more normal situation – until the feds got in on the act again.

Our advice: Eat the peach now.

[Fenix]

Petrobras "Century" Bond Prices Collapse As 'June Plan' Already "Obsolete"
Submitted by Tyler D.
09/11/2015 - 14:20

Remember June - when everything was (apparently) awesome in BRIC-land and somehow a large group of duration-seeking greater-fools used Other-People's-Money to buy Petrobras bonds that mature in 100 years! Well those bonds are now trading less than 70c on the dollar (with yields pushing 10%) as Brazil's state-run oil company Petrobras, which slashed its five-year spending plan by 40% in June, admits that plan is already obsolete (two company sources told Reuters on Thursday). Petrobras will likely cut back further as growing debt costs, falling oil prices and a weak currency are the perfect storm for the company.




Oblivious To Risk – Investors In La-La-Land
09/11/2015 13:20 -0400
Submitted by Pater Tenebrarum
Complacency Still Reigns

Given current market volatility and the increasing amount of evidence showing that the global central bank money printing orgy of recent years has utterly failed to produce a so-called “self-sustaining” recovery, it is quite odd how nonchalant investors remain about the outlook for “risk assets” such as stocks.

leadership_cce6_640x390

In this context, we wanted to show our readers a chart a friend has recently sent us. This chart depicts the MSCI Global Index and contrasts it with a “macro confidence” indicator (“global risk sentiment”). This indicator does not take sentiment surveys into account – instead it is purely based on a variety of market prices and positioning data that are held to reflect investor sentiment. Not surprisingly, this indicator often has contrarian implications. It is quite stunning to what extent it is currently diverging from stock prices. Apparently, investor confidence not only hasn’t suffered, it has actually soared to a new high for the year:

1-MSCI World vs Sentiment 150908

Global risk sentiment (red) vs. global stock prices (black) – a huge gap has opened up between reality and perceptions


Our friend also pointed to a publicly available article by Sentix, a German company that analyzes sentiment data and is widely acknowledged to be the go-to expert in this particular field. The article can be found here. Here is the decisive excerpt:

“The latest sentix data set reveals an alarming discrepancy: investors’ fundamental belief in equity prices is still rising despite falling economic expectations. Potential risks are especially lurking in the US market. Investors are turning a blind eye on possible adverse effects for equities as economic optimism fades.


[…]


Discrepancies of such magnitude reflect serious risks. Though, rising skepticism about economic expectations has not raised investors’ awareness regarding equity price developments – investors still perceive an engagement in equities as an investment without alternative. Moreover, investors’ blind trust in the power of central bank interventionism is threatening. Would behavior be consistent with expectations should reactions follow suit – with negative consequences for equity price developments.

(emphasis in original, with exception of the sentence about “blind trust in the power of central bank interventionism”)

Sentix provides the following chart that juxtaposes economic expectations with the “strategic bias” of investors toward the US stock market according to its surveys:


2-20150908_iif_eco_expectations_bias_usa_eng

Strategic bias toward US stocks vs. economic expectations – yet another huge gap


Naturally, we believe that the most important sentence in the accompanying article is the one about unbridled faith in the “central bank put”. To this it should be noted that investors in the US stock market can no longer rely on the Federal Reserve having their back – at least not before stock prices are a lot lower. The Fed isn’t even contemplating additional monetary pumping at the current juncture – instead, it is agonizing over whether or not to implement its first baby step rate hike.


An Aside – The Fed’s Modus Operandi

We should interpose here that the Fed’s new modus operandi since the 2008 crisis actually enables it to hike rates and run a loose monetary policy at the same time. How so? Consider how the imposition of the federal funds target rate works. In the pre-crisis world, the Fed would simply add to or drain reserves from the interbank lending market in order to manipulate the FF rate to its desired target. Whenever commercial banks were expanding credit and were demanding more reserves than were offered by other banks, the effective FF rate would be pushed up. In order to prevent it from being pushed beyond the administered “target rate”, the Fed would jump into the breach as the enabler of credit expansion and provide additional reserves from thin air (conversely it would drain reserves if the supply of reserves offered by commercial banks threatened to push the FF rate below target – a very rare event indeed). This was done by the Fed either purchasing assets from the banks, or selling assets to them (usually on a temporary basis via repos, but occasionally also via “coupon passes” that enlarge the money supply permanently).

But how does this work during or after “QE”? The answer is, it cannot possibly be done in this manner anymore. Hence the introduction of “IOR” – interest on reserves. By setting the interest it pays on excess reserves at the upper boundary of the FF rate corridor, the Fed can prevent banks from offering large amounts of reserves in the overnight interbank lending market, since they can earn more interest for them from the Fed directly. It can conversely also stoke the supply of reserves from the banking system by paying less on bank reserves. Most importantly though, IOR has decoupled assets held by the Federal Reserve system from the FF rate. Thus the Fed can actively expand the money supply at any time, even while it hikes rates! It is important to be aware of this fact.


Why Faith in the Central Bank Put is Misguided

It is perhaps not surprising that investors have such faith in central banks saving their bacon – after all, it is common knowledge that unbridled money printing has been the main driving force behind asset price inflation. When central banks (or commercial banks with central bank assistance) are expanding the money supply, it is an apodictic certainty that some prices in the economy will rise. Given the manner in which new money enters the economy, it is quite normal that securities prices are among the first prices to rise, and clearly they are also among the prices affected the most by an expansion of the money supply.



3-TS-2

US money supply TMS-2: The tinder for the party on Wall Street – US money supply expansion – click to enlarge.



However, the rate of change in US money supply expansion has slowed considerably, from annualized peak growth rates close to 17%, resp. 16% in late 2009 resp. late 2011, to 8.34% as of July 2015. Concurrently, stock prices (based on the S&P 500 Index) have risen by nearly 230% between their 2009 low and their 2015 peak, and the increase since early 2012 alone has amounted to over 70%. It is doubtful whether stock prices can rise much further unless money supply growth re-accelerates. This seems unlikely to happen in the near term.

It is clear though that the Fed is going to resume monetary pumping if the pressure from declining asset prices becomes big enough. A point investors seem to be forgetting though is this: Once risk aversion increases and the market begins to decline, central banks are reactive, and they only react once there is considerable market upheaval. Investors are then faced with the fact that whatever actions a central bank takes to pump up money supply growth again, the effect will only arrive with a considerable lag. Indeed, the market’s rally between 2012 and 2015 was largely the lagged effect from the peak in money supply growth rates recorded in late 2011. We know this inter alia because the rally consisted of little but “multiple expansion”. It wasn’t a reflection of a big increase in corporate earnings.

In short, the Federal Reserve will be unable to prevent a crash or a bear market. It has always been unable to prevent bear markets from unfolding. Obviously, if it were otherwise, stocks would never have declined between 2000 and 2002 or 2007 and 2009 (or at any other time for that matter).

One more interesting data point in connection with “economic reality and perception” is provided by Citigroup’s Economic Surprise Index. This indicator shows whether the expectations of economists regarding economic data points are exceeded or undercut on average. What is interesting about it is how sluggish this indicator’s most recent recovery has been. Normally it tends to fluctuate quite quickly within its historical range, but recently it has recovered only very reluctantly, has remained in negative territory since January and seems to be turning back down already after merely recovering half of its previous decline:


4-Citigroup economic surprise index

Citigroup’s Economic Surprise Index – lower highs, lower lows and a reluctant bounce that hasn’t managed to push it out of negative territory thus far – click to enlarge.

While the recent string of weaker-than-expected economic data is not yet indicating an imminent US recession, it is getting ever closer to doing so. The stock market isn’t going to fare particularly well if a recession is in the offing (the average decline from the peak during recessions is 30%). The danger of a very large denouement is quite elevated in light of extant leverage (record high margin debt) and excessive valuations.


Conclusion

The market has delivered a warning shot in August, but it seems investors aren’t taking it seriously yet. This could turn out to be a costly mistake. If (or rather when) faith in the omnipotence of central banks crumbles, we could see an unusually severe market dislocation.
Average:

[Fenix]

87 Dead After Crane Collapses In Saudi Arabia's Grand Mosque Following Storm, Lightning Strike
Submitted by Tyler D.
09/11/2015 - 14:31

At least 87 people were killed after a crane crashed earlier today in Mecca's Grand Mosque with Saudi Arabia's Civil defense adding another 184 people were injured in the fatal accident which takes place just weeks before Islam's annual Hajj pilgrimage which takes place between September 21-26. Some point out pictures circulating on social networks of what may have been a lightning strike hitting the crane just moments before the fatal crash. Others point out the macabre coincidence that this tragedy takes place on the 14th anniversary of September 11.




Selling The Blips
09/11/2015 11:20 -0400
Via EconomicNoise.com,

investingworld-stock-prices

If anyone has not noticed, the market has changed from rewarding buying the dips to rewarding selling the blips.

Selling the blips is how smart money leaves markets. Smart money is also big money. There is too much of it to fit through the exit door at the same time. That is why market crashes rarely occur in a day (August of 1987 was an exception) or even short periods like a month. Even the Great Depression took multiple years for the stock market to reach its ultimate bottom.
Why Wall Street Is Always Positive Regarding Markets

Maintaining positive market psychology is always pushed by Wall Street. In good times optimism drives markets where the big money wants them to go — up. In bad times, Wall Street may or may not recognize what is happening but it pays for them to be bullish nevertheless. Optimism tends to keep naive investors in markets which cushions the declines. This optimism also produces upward blips which are used by the smart money to exit with much of their profit intact.
Market Declines

Markets rarely go straight up or straight down. To rise markets need liquidity or additional funds. Quantitative easing provided this need quite nicely. Its sustained use provided the market advance seen in the chart below. Supplementing the liquidity infusion was the financial repression policy employed by the Federal Reserve. While they were flooding the system they were also driving interest rates to near zero, forcing monies into equities because it became the only game in town.

The chart below is SPY, an ETF that mirrors the performance of the S&P 500 index. Each bar represents monthly data. SPY bottomed in April of 2009 at around 67. This drop was from about 157 reached in November of 2007. It took about a year and a half for this decline of about 55% to play out.

spysince2009



QE ended near the end of 2014. That’s when the market leveled off. Shortly thereafter, Forbes reported:

It should not be forgotten that U.S. QE is over. What we are seeing in the market is in large part caused by this change. A trillion dollars a year of credit easing, asset support and indirect motorization is over.



The dollar has therefore rallied hard. Anything that amounts to being the anti-dollar has been crushed. The obvious anti-dollars are gold and oil. This is why they have slumped.



Beware narrative that personalizes market moves. People want to blame people or groups directly, but when the cause is systemic instead of using abstract explanations, finger pointing at personifications is a natural instinct. However, it’s misleading.

For comparison purposes, the peak to the trough period for the Dow in the previous decline is shown in this chart (each bar represents weekly data):

spy2007drop



There were several weeks during this decline where people were buying the dips because that had worked in the prior several years. Note also that almost six months into this decline SPY had only dropped 15 – 20 points from its high, roughly 2o – 25% of the loss that would ultimately be incurred. Things got really nasty over the next 12 months, especially during October and November of 2009. 70 to 75 points were lost in this 12-month period.


Recent Activity

For comparison purposes, recent weekly data of the period from our recent high are shown below:

spy since 2014

These charts are history. History does not tell what will happen in the future. For those who believing buying the dips is always a winning strategy, perhaps they will instill some needed caution. In the end, buying the dips or selling the blips will have been judged to have been the correct strategy. Unfortunately, there is no way of knowing which one in advance.
Why Selling The Blips Makes Sense

My opinion is that there are very strong reasons to not be buying the dips:

1. The economy today is hollowed out, arguably worse than it was in late 2009.
2. There is unlikely to be any more QE (or if there is it will be ineffective).
3. The entire world is in dire straits with regard to their debt and economic problems. It is difficult to see where growth is occurring or what could change that scenario short of a world-wide depression.
4. The geo-political situation is as bad or worse than it was prior to World War II.
5. If there is any upside at all in the stock market, it likely is in the ten percent range.
6. The downside is probably 50% from these levels.
7. The perceived imbalance between upside and downside potential is not one to be buying into.

More Quantitative Easing

The economy is a mess. Inordinate amounts of QE failed to create a recovery (as non-Keynesians predicted). However QE was very effective in driving the valuation of financial assets to levels that are inconsistent with the moribund economy. That will not change. Whether it will be used again in an attempt to re-energize the stock market would not surprise. Politics and not economics is dictating policy and a failure of the stock market unmasks all the BS that has been acclaimed about the economy.

Personally, I don’t think the Fed will raise interest rates this month. Doing so would likely create a massive sell-off. There is no way to avoid the sell-off regardless of what the Fed does. Better that it happen without it occurring with a rate increase. That would be the politic thing to do. Better that the arsonist is not there when the fire is discovered.

The political unrest in the populace is palpable. There is a good chance that the Fed will re-institute more QE before the ultimate collapse.

Regardless of how this plays out, manipulation can change prices but does not affect underlying values. Valuations eventually come in line with values and values seem a lot lower than current valuations.

[Fenix]

Interbank Credit Risk Is Rising Ominously Again In America
Submitted by Tyler D.
09/11/2015 15:30 -0400

We have been anxiously reminding investors of the drip-drip-drip increases in market-perceived credit risk for US financials for much of 2015. Having risen to almost 90bps amid the chaos of 2 weeks ago (almost double the lowest levels post-Lehman hit in June of last year), it appears systemic counterparty risk is very much on the rise. What is more concerning however, as Alhambra's Jeffrey Snider notes, the TED spread has exploded higher (since China's devaluation) indicating, as convention has it, a marked increase in perceptions of interbank credit risk.

"Credit" risk perceptions have risen rapidly...



And now the ominous TED Spread is flashing warning signals about the US Financial system...



As Alhambra's Jeffrey Snider notes:

With t-bills settled down again (another clue as to how disruptive the “dollar” run became at its worst), the TED spread has exploded higher indicating, as convention, a marked increase in at least perceptions of interbank credit risk.



The TED spread now is where it was in the weeks just following the flash crash (Greece/euro) in later May 2010, and equal to October 2011 after the SNB pegged to the euro and the Fed reproduced dollar swaps globally.



This is significant and seems to be underappreciated everywhere but places like VIX (and especially longer VIX futures).

* * *

Despite some modest amelioration in the last week - after massive seemingly coordinated intervention, perhaps, investors will start paying attention now.

[Fenix]

It Begins: Europe Flooded With Reports Of "ISIS Terrorists" Posing As Refugees
Submitted by Tyler D.
09/11/2015 - 17:40

As part of the refugee crisis in which tens of thousands of innocent Syrians have been displaced and seeking European asylum, it was only a matter of time before one or more was "found" to be ISIS terrorists in order to perpetuate the fear and crisis narrative. A crisis which Brussels would never go to waste. That time has arrived after a report by German RTL and carried by NewObserver that "an ISIS terrorist posing as an "asylum seeker" has been arrested by German police in a “refugee” center in Stuttgart, and German customs officers have seized boxes containing Syrian passports being smuggled into Europe."



Inside Ground Zero Of Canada's Recession
Submitted by Tyler D.
09/11/2015 - 17:59

In the past year, we have extensively profiled the collapse of ground zero of Canada's oil industry as a result of the plunge in the price of oil. Since then it has only gotten far worse. As Mark Thornton of the Mises Institute points out, in a report from the Financial Post shows that Calgary in Alberta Canada now has 1.7 million square feet of empty office space, the most in North America with another 5.2 million under construction! But that's just the beginning, because for many recent millionaires, the real cash crunch has finally arrived which means business is thriving for at least one industry: pawn shops.

[Fenix]

Weekend Reading: Rooting For The Bull?
09/11/2015 16:30 -0400
Submitted by Lance Roberts

This past week has seen a continuation of market volatility unlike anything witnessed over the last several years. Of course, this volatility all coincides at a time where market participants are struggling with a global economic slowdown, pressures from China, collapsing oil prices, a lack of liquidity from the Federal Reserve and the threat of rising interest rates. It is a brew of ingredients that would have already likely toppled previous bull markets, and it is only by a hairsbreadth the current one continues to breathe.

However, as I addressed yesterday:

“Since the ‘debt ceiling debt default’ crisis in 2011, the markets have traded within a much defined bullish trend.



That trend was decisively broken this summer, and the market has yet to regain its footing. While the market ‘bulls’ expect the markets to recover and move back to all-time highs, there is also a possibility of failure that should not be ignored."

SP500-Technical-Trend-091015

"If the market rallies back to the bullish trend channel, and fails, it will likely lead to a continuation of the current correction.



Could the market re-establish a new bullish trend channel at a lower level? Yes. However, as discussed in Tuesday’s missive, the internal deterioration in the market is more consistent with the development of more major bull market peaks rather than just a correction within a bullish trend.



In every market cycle throughout history, there have been times where it was vastly more beneficial to “err to the side of caution.



This is very likely one of those times.”

This weekend’s reading list is dedicated to the views on the issues surrounding the current market environment and the Fed. While it is always more fun to root for a continuation of the bull market, it is a far different matter to bet on it and be wrong.
THE LIST

1) Monetary Policy Lags – Fed Must Act Soon by Richard Fisher via The Financial Times

“Policymakers should focus on the direction of price changes over the medium term. This is easier said than done; you cannot be certain whether the latest inflation numbers reflect a long-running trend or a passing storm. The Fed tries to get around this by focusing on “core” inflation measures that leave out food and energy prices, which are volatile in the short term. The idea is to silence the noise in the inflation numbers, while leaving the signal.



But the Fed’s favored measure does not do as good a job as it could; while less noisy than the headline inflation rate, it has also been persistently low. Over the past 10 years, looking only at data that would have been available to policymakers in real time, conventional core PCE inflation has averaged 1.65 per cent, nearly 30 basis points below headline inflation’s 1.94 per cent average. Setting policy using this measure is like navigating using a compass: it has a systematic bias and is influenced by local anomalies in the earth’s magnetic field.”

Read Also: What Jackson Hole Missed On Inflation by Bob Eisenbeis via Cumberland Advisors



2) The Fed Is About To Unleash Deflation by Deutsche Bank via ZeroHedge

“Breaking down the breakeven and real yield components verifies that central bank liquidity has been more associated with real yields then breakevens, however the relationship is perverse! Real yields have tended to fall when balance sheet expansion is slowing while breakevens have generally been stickier. This suggests that risk assets drive (real) yields and that breakevens anticipate a (delayed) liquidity injection.



Right now the decline in Central Bank liquidity suggests 5y5y should be closer to 2 percent or below not 3 percent or above. And this is before the Fed has tightened and China has potentially ‘finished’ its adjustment.”

zero-hedge-091015

VIDEO: David Stockman: Why Fed Reserve Actions Will Have Disastrous Long-Term Consequences.



3) The Stock Market’s Wake Up Call by Eric Nelson via Servo Wealth Management

“Until recently we had gone several years without a double-digit decline in US stocks. For long-term investors, that length of time can lead to a false sense of security and entitlement—believing that stocks should always go up and they have a right to consistently-positive returns. But that has never been the case; if it were, long-term historical and future returns wouldn’t be as high as they have been or are expected to be. The chart below looks at the periodic returns of stocks, bonds and balanced portfolios from 1928-2014, net of inflation.”

Best-Worst-Returns-ServoWM

Read Also: 5 Reasons The Markets Are Going Haywire by Matt Turner via Business Insider



4) The Stock Market Is In All-Or-Nothing Mode by Matt Egan via CNN Money

“Investors have been taken on a wild ride this summer that's been nearly unprecedented.



The craziness was punctuated by the Dow's 1,000-point nosedive on August 24, its largest intraday point decline on record.



But here's an even more telling sign of the swings: Bespoke Investment Group tracks "all or nothing days," which occur when at least 80% of the S&P 500 advances or declines. In other words, herd mentality drags nearly the entire market in one direction or the other.



During the 12 trading sessions between August 20 and September 4, there were eight all or nothing days, according to Bespoke. There have only been two other times since 1990 that there were as many all or nothing days in that short of a period. These events have been extremely rare.”

Read Also: Use The Coming Stock Market Rally To Sell by Ken Goldberg via TheStreet.com



5) Baby, It’s Cold Outside by Doug Kass via Kass’ Korner

“As for Wall Street, baby it’s really cold outside these days – and the market appears to me to have pneumonia. But it’s not as if this brutal season came upon us without warning, as there were clear indications of a blizzard ahead…

* Market leadership was narrowing and breadth was deteriorating.
* Transports, cyclical and industrials had already entered a bear market.
* The price of numerous forward-economic-looking commodities (i.e.. copper and oil had plunged.
* Volatility had exploded in many asset classes (stocks, bonds, currencies and commodities).
* Signposts of slowing global economic growth were numerous, led by moderating growth in China, the current engine of worldwide growth.
* Corporate profit-growth expectations were steadily eroding.
* Credit spreads were widening.
* Easy U.S. monetary policy was losing its impact, and inertia on our leaders’ part was the mainstay of fiscal policy.
* Malinvestment and overvaluations were sprouting up in many different asset classes.
* Despite all of these fundamental and technical faults, sentiment was unaffected and the “bull market in complacency” continued as valuations rose ever higher.
* The chasm between financial asset prices and the real economy widened. “

Read Also: Where Is The S&P 500 Heading Now?by J C Parets via All-Star Charts
Other Reading

* What You Witnessed Wasn’t A Crash by John Hussman via Hussman Funds
* Rates Sadly Reflect The Fed, Not The Economy by Joseph Calhoun via Alhambra Partners
* The Corporate Revenue Recession Spreads by Wolf Richter via Naked Capitalism
* The Best Investment For The Next 12-Months by Jesse Livermore via Philosophical Economics
* If It Looks Like A Bear… by Jesse Felder via The Felder Report
* Definitions Every Investor Should Know (Funny)by Ben Carson via A Wealth Of Common Sense

“Perhaps the foremost lesson which I have learned is that emotions rule the world, rather than statistics, information, or anything else.” – Roger Babson

Have a great weekend.

[Fenix]

Bank Of Japan Buying Power Runs Dry: "If They Don't Increase Now, It's Going To Be A Shock!"
Submitted by Tyler D.
09/11/2015 19:00 -0400

Since 2010, The Bank of Japan has 'openly' - no conspiracy theory here - been a buyer of Japanese stock ETFs. Their bravado increased as the years passed and Abe pressured them from their independence to 'show' that his policies were working to the point that in September 2014, The BoJ bought a record amount of Japanese stock ETFs taking its holdings to over 1.5% of the entire market cap, surpassing Nippon Life as the largest individual holder of Japanese stocks.

Having stepped in a stunning 76% of days to ensure the market closed green, it appears, as Bloomberg reports, time (or money) is running out for Kuroda and the BoJ having spent 78 percent of its allotment as of Sept. 7. "They've only got a little bit left in their quota," notes one trader, "The BOJ had a big role in supporting the market," he implored, "if they don’t increase purchases now, it’s going to be a shock."







As Bloomberg reports,

On Sept. 8, as the stock market slumped, investors were surprised to find the Bank of Japan, normally a buyer of exchange-traded funds on the Tokyo bourse, absent.



What happened? The central bank, which is authorized to purchase about 3 trillion yen ($25 billion) in equity ETFs a year, is running out of ammunition, having spent 78 percent of its total as of Sept. 7. Because the BOJ usually buys on days the market falls, it sped up amid a rout in the Topix index.



Now it must slow down for the rest of 2015 or increase its allotment, according to Mitsubishi UFJ Morgan Stanley Securities Co.



...



“They’ve only got a little bit left in their quota,” said Seiji Arai, a strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo. “I think they’ll vow to increase yearly purchases by 1 or 2 trillion yen in October.”



With just 670 billion yen to go until its limit, the central bank has shrunk the amount it buys each time by 15 percent from its first purchase of the year to 31.7 billion yen in September. It stuck to that amount with a purchase on Thursday.



As the Topix recorded its worst monthly loss since 2012, the central bank purchased 302 billion yen in ETFs. Without that, the rout would have been much worse, according to Arai.

As he concludes - so perfectly summing up the farce that so many call "markets"...

“The BOJ had a big role in supporting the market,” he said. “If they don’t increase purchases now, it’s going to be a shock.”

[Fenix]

$20 Oil? Goldman Says It's Possible
Submitted by Tyler D.
09/11/2015 17:51 -0400

We’ve long framed collapsing crude prices as a battle between the Saudis and the Fed.

When Saudi Arabia killed the petrodollar late last year in a bid to bankrupt the US shale space and secure a bit of leverage over the Russians, the kingdom may or may not have fully understood the power of ZIRP and the implications that power had for struggling US producers. Thanks to the fact that ultra accommodative Fed policy has left capital markets wide open, the US shale space has managed to stay in business far longer than would otherwise have been possible in the face of slumping crude. That’s bad news for the Saudis who, after burning through tens of billions in FX reserves to help plug a yawning budget gap, have now resorted to tapping the very same accommodative debt markets that are keeping their competition in business as a fiscal deficit on the order of 20% of GDP looms large.

But even with a gaping hole in the budget and an expensive proxy war raging in Yemen, it’s not all bad news for Saudi Arabia as evidenced by King Salman’s lavish Mercedes procession upon arrival in DC last week and as evidenced by the fact that, as The Telegraph reports, non-cartel output is beginning to fold under the pressure of low prices. Here’s more:

Oil produced outside the Orgainsation of the Petroleum Exporting Countries (Opec) is slowing at its fastest rate in 20 years as lower prices hit higher cost producers such as the North Sea and US shale drillers, a leading energy think tank has warned.



The Paris-based International Energy Agency (IEA) has said that lower production in the US, Russia and the North Sea would result in output outside Opec dropping to 57.7m barrels per day (bpd) in 2016. The majority of the declines would come from US light crude, which is expected to decline by 400,000 bpd.



"The steep declines in US crude oil production seen since the end of June has created some optimism that we are now finally seeing that start of a steep decline," said Bjarne Schieldrop, chief commodities analyst at SEB.



Oil prices have plunged 50pc this year with Brent crude trading well below $50 per barrel, a level which makes it uneconomical for many producers. Opec, under pressure from Saudi Arabia, has allowed oil prices to fall in an effort to protect its shrinking market share especially from the rise of shale oil drillers in the US.

So mission (partially) accomplished we suppose, and with banks set to reevaluate credit lines to US producers next month (i.e. the revolver raids are coming), it likely won’t be long before the competition starts to dry up. The only remaining question then, is how low will oil go in the near- and medium-term and on that point we go to Goldman for more:

Oil prices have declined sharply over the past month to our $45/bbl WTI Fall forecast. While this decline was precipitated by macro concerns, it was warranted in our view by weak fundamentals. In fact, the oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016 on further OPEC production growth, resilient non-OPEC supply and slowing demand growth, with risks skewed to even weaker demand given China’s slowdown and its negative EM feedback loop.




So a persistent global deflationary supply glut driven by lackluster demand. Nothing new there, and in fact, that exact confluence of factors was tipped to send oil to $25 in these very pages more than nine months ago. Now back to Goldman:

Given our updated forecast for a more oversupplied oil market in 2016, we are lowering our oil price forecast once again. Our new 1-, 3-, 6- and 12-mo WTI oil price forecast are $38/bbl, $42/bbl, $40/bbl and $45/bbl. Our 2016 forecast is $45/bbl vs. $57/bbl previously and forwards at $51/bbl. As we continue to view US shale as the likely near-term source of supply adjustment given the short cycle nature of shale production, we forecast that US Lower 48 crude & NGL production will decline by 585 kb/d in 2016 with other non-OPEC supply down 220 kb/d to end the oversupply by 4Q16.




Got it. And just how low, in a worst case scenario, could crude go?

This creates the risk that a slowdown in US production takes place too late or not at all, forcing oil markets to balance elsewhere or as they have historically cleared, through a collapse to production costs once the surplus breaches logistical and storage capacity. Net, while we are increasingly convinced that the market needs to see lower oil prices for longer to achieve a production cut, the source of this production decline and its forcing mechanism is growing more uncertain, raising the possibility that we may ultimately clear at a sharply lower price with cash costs around $20/bbl Brent prices, on our estimates. While such a drop would prove transient and help to immediately rebalance the supply and demand for barrels, it would likely do little for the longer-term capital imbalance in the market with only lower prices for longer rebalancing the capital markets for energy.

So there you have it, a collapse to $20 Brent, but while the Saudis may have won the battle, the war is not yet over:

The levers to force HY producers into lower production, such as borrowing basis redeterminations, debt maturities and hedge coverage, are significantly less binding for IG E&Ps. It is instead management’s focus on balancing capex and cash flow and investors’ willingness to finance funding gaps that are the levers of adjustments for this cohort of companies. And while HY debt markets may be once again shutting, tentative signs of greater discipline by US IG E&Ps have so far only translated in stabilizing production guidance rather than pointing to the decline that our global oil balance requires.



As a result, the sharp intensification in producer financial stress observed recently – with forward oil prices and energy equity share prices at multi-year lows (and credit spreads at highs) – is unlikely to yield sufficient financial stress in the short-term. So while this deterioration in financial conditions is finally reflecting the markets’ decreasing confidence in a quick rebound in prices and a recognition that the rebalancing of supply and demand will likely prove to be far more difficult than previously expected, we now believe that such stress needs to remain in place well into 2016 and up until evidence emerges that US shale production growth is actually required.



And speaking of war, the obvious risk to any forecast that calls for sharply lower crude is that some mid-air "accident" in Syria takes the "proxy" out of "proxy war", in which case crude soars as Russia and Iran square off against a US coalition that would swiftly include Saudi Arabia in what would very likely be the precursor to a wider conflict the scope of which we haven't seen since 1939.

Oh, and for all the muppets out there, Goldman has upgraded European oil producers:

Dividends may be cut, but with over coverage now yielding 6% on average this is becoming priced in. We expect returns and FCF to trough in 2016, and improve in 2017/18 driven by higher oil prices and falling costs. Even with this, valuations do not yet look compelling, but we move to a Neutral Coverage View from Cautious.



More American Cronyism: US Government Selling Visas To Fund Luxury Apartment Buildings
Submitted by Tyler D.
09/11/2015 - 17:30

Another day, another story highlighting just how completely corrupt and sleazy the U.S. economy has become... The U.S. government is subsidizing the wealthiest developers to build projects for the wealthiest Americans. Someone must have taken a class taught by the Federal Reserve. Just another day in the imperial Banana Republic.

[Fenix]

It's Official: The Next Recession Will Definitely Not Happen In 2018
Submitted by Tyler D.
09/11/2015 18:30 -0400

Last month we remarked on PhD economists’ uncanny ability to make bad predictions.

As a rule, the only people worse at their jobs than weathermen are economists and the only real difference between the two professions is that when the weatherman gets it wrong, you get caught in the rain without an umbrella, but when an economist that someone installed in the Eccles Building gets it wrong, there’s the very real potential for the financial universe to collapse. Here’s how we summed up the profession:

If PhD economists were serious about getting things right, they would have a tough job. That goes double for PhD economists charged with making policy decisions based on their conclusions.

That’s because economics (like sociology and political science and astrology) isn’t a real science. It’s a pseudo-science. And as is the case with other pseudo-sciences, it’s flat out impossible to discover laws and immutable truths, no matter what anyone told you in your undergrad economics course.



Of course PhD economists aren’t really serious about getting things right, which means that in reality, their jobs are remarkably easy. Here’s the job description: make predictions that are almost never right and then make up any reason you want to explain away the fact that you were wrong. These explanations run the gamut from intentional obfuscation via opaque statistical tinkering (“residual seasonality”) to comically absurd attempts to turn common sense into an excuse for poor outcomes (“snow in the winter”).

We delivered that stinging indictment of the pseudoscience that is economics on the way to noting that back in January, some 75% of experts said the Fed would have hiked by now. Considering that rather abysmal track record, we encourage you to take the following with a grain of salt (or two grains, or a whole shaker full).

Via Bloomberg:

Some advice for President Barack Obama's successor: bring a plan to fight the next recession.


That's one conclusion drawn from a survey of economists Sept. 4-9, where the median forecast of 31 respondents has the next downturn occurring in 2018.


Assuming the collective wisdom of economists is right—which is a generous assumption given that predicting business cycles isn't exactly a cakewalk (ZH: manipulating business cycles isn’t a “cakewalk” either and economists try that too) —it puts the current expansion on track to have a lifespan of about nine years. That's a pretty good run, though the honor of the longest expansion on record would still belong to the decade that ended in March 2001.



The survey suggests that the next U.S. president will have just one calendar year to get settled before a downturn occurs. They may want to solicit some advice from Obama, who took office in January 2009, during the deepest recession in the post-World War II era.

So there you have it, rock solid proof that there will be no recession in 2018. However things are looking pretty scary for 2021 and 2022 because as you can see from the graph shown above, only 1 economist is betting on a downturn in either of those years, meaning a recession is a virtual certainty.

As Bloomberg goes on to note, the economists surveyed "said there's a 10 percent chance of a U.S. recession within the next 12 months," which is particularly amusing because if anyone was being honest at the BEA (i.e. if someone hadn't brought out "residual seasonality" to explain why GDP data needs to be double-adjusted), the US would have been one quarter of bad "weather" away from a recession earlier this year.

It's also worth noting that the experts polled don't seem to think much of the myriad risk factors staring them squarely in the face; risk factors like a rapidly decelerating China, slumping global demand, chronically depressed global trade, a worldwide deflationary supply glut, and a veritable meltdown in emerging markets. Indeed some of those factors were recently cited by Citi's pet rock-hating chief economist Willem Buiter who, as Bloomberg also points out, this week "assigned a 55 percent chance to some form of global recession in the next couple years." Which brings us to the punchline. The fourth sentence from the top in the Buiter's note predicting better than even odds for a global recession reads as follows:

Economics isn’t rocket science, and even rockets frequently land in the wrong place or explode in mid-air.

[Fenix]

Fourth Turning: Crisis Of Trust
09/11/2015 19:30 -0400
Submitted by Jim Quinn

“Imagine some national (and probably global) volcanic eruption, initially flowing along channels of distress that were created during the Unraveling era and further widened by the catalyst. Trying to foresee where the eruption will go once it bursts free of the channels is like trying to predict the exact fault line of an earthquake. All you know in advance is something about the molten ingredients of the climax, which could include the following:

* Economic distress, with public debt in default, entitlement trust funds in bankruptcy, mounting poverty and unemployment, trade wars, collapsing financial markets, and hyperinflation (or deflation)
* Social distress, with violence fueled by class, race, nativism, or religion and abetted by armed gangs, underground militias, and mercenaries hired by walled communities
* Cultural distress, with the media plunging into a dizzying decay, and a decency backlash in favor of state censorship
* Technological distress, with cryptoanarchy, high-tech oligarchy, and biogenetic chaos
* Ecological distress, with atmospheric damage, energy or water shortages, and new diseases
* Political distress, with institutional collapse, open tax revolts, one-party hegemony, major constitutional change, secessionism, authoritarianism, and altered national borders
* Military distress, with war against terrorists or foreign regimes equipped with weapons of mass destruction”

The Fourth Turning – Strauss & Howe – 1997

September 2015 marks the seventh anniversary of this Fourth Turning Crisis. The economic, social, cultural, ecological, political, and military distress propagates by the minute as the globe is besieged by economic turmoil, increased human suffering, and endemic corruption of the political and ruling classes. The Federal Reserve/Wall Street created global economic implosion was the spark which catalyzed this fourth Crisis period in U.S. history in September 2008. Neil Howe in a 2012 essay assessed the beginning of this Fourth Turning and why 9/11 was not the catalyst:

“Pending stunning new developments, I believe the catalyst occurred in 2008. It’s a date that is looking better and better as time goes by. The year 2008 marked the onset of the most serious U.S. economic crisis since the Great Depression. It also marked the election of Barack Obama, which could yet turn out to be a pivotal realignment date in U.S. political history. In fact, if I had to give the catalyst a month, I would say September of 2008. The global Dow was in free fall. Banks were failing. Money markets froze shut. Business owners held their breath.

9/11 will go down as one of the more famous crisis precursors in American history. A crisis precursor is an event that foreshadows a crisis without being an integral part of it. Other such precursors in American history include the Stamp Act Rebellion (1765), or Bleeding Kansas (1856), or perhaps the Red Scare (1919).”

The initial spark has triggered a chain reaction of unyielding responses by those in power, including: handing $700 billion of taxpayer funds to the Wall Street bankers whose reckless pervasive greed and fraudulent derivative products caused the worldwide conflagration, 0% interest rates for the last seven years, a quadrupling of the Federal Reserve balance sheet to $4 trillion through QE to infinity, government stimulus spending which increased the national debt from $10 trillion to $18 trillion in seven years, ongoing $600 billion annual deficits, using fraudulent accounting to disguise the insolvency of the Too Big To Fail Wall Street banks, and a conscious choice by corrupt politicians and captured government regulators to not prosecute one criminal banker.

None of these initial responses have solved any of our pervasive problems or averted further emergencies. Not only haven’t these responses resolved the intractable economic conundrums facing the world, but they have exacerbated the next round of monetary disasters rapidly approaching. Strauss and Howe predicted the initial catalyst event would not worsen into a full-fledged catastrophe because the powers that be would find a way to avert the initial danger and stabilize the situation “for a while”. The key point was those benefiting from the existing corrupt world order would do whatever it took to temporarily forestall a calamity which would result in their downfall, loss of power, and ultimate imprisonment. They have successfully delayed the regeneracy phase of this Fourth Turning by turning on the monetary debt spigot full throttle.

It is highly unlikely we will have a resolution to this Crisis period for at least another ten years, so if you think the worst is over you are badly mistaken. If the climax is somehow accelerated like the Civil War, it will likely result in bloody wars, with a horrific death toll. The five year lull can be viewed as the world passing through the eye of an immense hurricane. There will always be ebbs, flows and lulls within a 20 year long Crisis, as seen in previous Fourth Turnings.

The Boston Tea Party catalyst spark occurred in December 1773, but the fireworks didn’t get going until 1775 and the regeneracy Declaration of Independence event in 1776. The Civil War Fourth Turning had no lulls. The catalyst election of Abraham Lincoln to the regeneracy event of the First Battle of Bull Run was only nine months. The acceleration did not allow for cooler heads to prevail. The result was ghastly death and destruction. The 1929 Stock Market Crash catalyst was followed by a three year lull until FDR’s election and New Deal programs marked the regeneracy.

In my previous four part article Fourth Turning – The Shadow of Crisis Has Not Passed written early in 2015 I attempted to explain generational theory, provided evidence we are still early in this Crisis, pondered the potential clash between the citizens and our debased, dysfunctional, captured government, and contemplated the kind of war which will thrust the world through the gate of history towards an uncertain future. The misconceptions regarding generational theory and the Fourth Turning keep a vast swath of otherwise lucid thinkers from understanding the implications of generational mood changes which drive the cyclical nature of history. The cognitive dissonance and normalcy bias of most Americans blinds them to the lessons of history and leaves them vulnerable to the winter that has beset the nation.

The Fourth Turning is not a prophecy or some Nostradamus like predictions. It’s a logical theory based upon the average time span of a long human life and the four phases of that life: childhood, young adulthood, mid-life, and old age. The interaction of generations during their phases of life is what produces the profound mood changes throughout history. The dramatic events during the course of antiquity are less important than how society responds to them. The reaction is substantially determined by the season of the saeculum and the generational mood that aligns with that season. We’ve entered the Winter season, with bitterly cold days ahead and intense blizzard-like conditions forecast for the next decade.

The ignorance of linear thinking advocates regarding the cyclical nature of history is either due to their “progressive” public educational brainwashing or their intellectual inability to grasp the obvious. Our daily existence is cyclical with 24 hours in a day, 365 days in year based upon earth’s orbiting the sun, 12 months divided into four seasons, and the circle of life – birth through death is the ultimate cycle perpetuating life on this planet. There are dozens of astronomical, mathematical, religious, sleep, agricultural, social, economic and war cycles known to man. Martin Armstrong has a cycle theory predicting the collapse of government between 2016 and 2020. The Kondratiev Wave theory and Elliott Wave Theory are preached by “experts” and followed by millions. Of course, many of these “experts” are busy selling their predictions in newsletters to make a buck.

The thought leaders in academia, politics, business, and mass media perpetuate the myth of never ending linear progress created by technological advances and the ever increasing intellectual evolution of mankind. The hubris of these people is incomprehensible when viewing history. The myopic delusions of these arrogant egotists are easily shattered by the horrific regressions of history. Were the Great Depression and the 65 million people killed during World War II progress for mankind? Was Stalin’s murder of 20 million Russian peasants a linear progression? Was Mao’s Great Leap Forward murder of 45 million Chinese peasants really a leap forward? Was the death of 5% of the U.S. male population in the space of four years during the Civil War really progress?

Mankind and civilization do not advance in a straight line. Progression and regression alternate in a cyclical fashion. As generations die out, memories of the previous cycle are forgotten, and the mistakes are repeated again. Human nature does not change. Good, evil, greed, fear, bravery, honesty, arrogance, sacrifice, and truth intermingle to drive humans through the cycles of history.

Strauss & Howe were economists and historians who attempted to make some sense out of the seemingly convoluted twists of history. They deciphered a pattern which could be traced back for centuries based upon the age and alignment of generations throughout history. They never attempted to capitalize on their work by selling newsletters or peddling their predictions about the future. When they published their work in 1997 they couldn’t predict the exact events which would drive the next Fourth Turning, but they could estimate the general timing and the core elements which would drive the crisis: debt, civic decay, and global disorder. These areas were neglected, denied, and unaddressed during the Unraveling period from 1984 through 2008. To read their words now, eighteen years after they were written and eleven years before this Fourth Turning struck, is haunting, as they describe precisely where we stand today:

“As the Crisis catalyzes, these fears will rush to the surface, jagged and exposed. Distrustful of some things, individuals will feel that their survival requires them to distrust more things. This behavior could cascade into a sudden downward spiral, an implosion of societal trust.”

“But as the Crisis mood congeals, people will come to the jarring realization that they have grown helplessly dependent on a teetering edifice of anonymous transactions and paper guarantees. Many Americans won’t know where their savings are, who their employer is, what their pension is, or how their government works. The era will have left the financial world arbitraged and tentacled: Debtors won’t know who holds their notes, homeowners who owns their mortgages, and shareholders who runs their equities – and vice versa.”

The Fourth Turning – Strauss & Howe – 1997

Regeneracy – Where Art Thou?

The regeneracy during a Fourth Turning is when a sense of urgency about institutional dysfunction and civic vulnerabilities coalesce the nation or large blocs of the homeland behind a strong leader to tear down the existing social, economic and cultural order and replace it with something different. The different can be better or far worse. The Declaration of Independence, First Battle of Bull Run, and election of FDR marked the regeneracy in prior American Fourth Turnings. They all occurred within four years of the initial catalyst. It is now seven years into this Fourth Turning and a clear regeneracy event has not materialized. This has been a frustrating development for those who are impatient to get this Fourth Turning moving at a quicker pace. But, each Fourth Turning will proceed at its own pace dependent upon events, the country’s reaction to those events, and the leaders we choose during the Crisis.

Neil Howe, in his 2012 essay pondered the regeneracy issue and described it more as an era than an event. It requires something dramatic that unifies the country or causes the people to break into separate unified factions.

“I think it’s pretty obvious that the regeneracy has not yet started. So how long do we need to wait for it? And how will we know when it starts? Those are good questions. I recently went back over The Fourth Turning to recall how we dated the stages of the each of the historical 4Ts. And I found that we were very explicit about dating the other three stages (catalyst, climax, and resolution) for each 4T. But we were always a bit vague about dating the regeneracy, treating it more like an era than a date. There is a reason for this. We may like to imagine that there is a definable day and hour when America, faced by growing danger and adversity, explicitly decides to patch over its differences, band together, and build something new. But maybe what really happens is that everyone feels so numb that they let somebody in charge just go ahead and do whatever he’s got to do. I’m thinking of how America felt during the bleak years of FDR’s first term, or during Lincoln’s assumption of vast war powers after his repeated initial defeats on the battlefield.

The regeneracy cannot always be identified with a single news event. But it does have to mark the beginning of a growth in centralized authority and decisive leadership at a time of great peril and urgency. Typically, the catalyst itself doesn’t lead directly to a regeneracy. There has to be a second or third blow, something that seems a lot more perilous than just the election of third-party candidate (Civil War catalyst) or a very bad month in the stock market (Great Power catalyst).

We are still due for such a moment. We have not yet reached our regeneracy. When it happens, I strongly suspect it will be in response to an adverse financial event. It may also happen in response to a geopolitical event. It may well happen over the next year or two. Given the pattern of historical 4Ts, it is very likely to happen before the end of the next presidential term (2016).”

As previously stated, The Fourth Turning does not predict what series of events will trigger a regeneracy. It lays out a generational framework regarding how generations will react to the events. As Howe points out, the regeneracy requires a 2nd or 3rd blow which seems even more perilous than the initial shock. His suspicion that it will be in response to an even worse financial debacle than 2008 and very likely to happen before the next election in 2016 appears to be dead on. The oblivious trusting masses will again be shocked and bewildered when the second devastating shock wave of this Crisis strikes in the next twelve months. The next global financial meltdown, caused by the Federal Reserve, along with central bankers in Europe, Japan and China, will create a fearful panic and an intense urgency for a strong self-assured leader who promises to rescue the nation from peril. The panic will coincide with the presidential election in November 2016.

The “Great Divider” Barack Obama squandered his chance to be the leader who united the nation when he proved to be nothing more than a captured political hack, bowing down to the corporate fascist establishment, while stirring wide spread resentment with his culture war rhetoric and inability to inspire confidence with his toothless hope and change sloganeering. His failure to reign in or prosecute the greedy sociopathic Wall Street criminals, his acquiescence to the military industrial complex by expanding our war mongering and sowing chaos in the Middle East, and his total disregard for fiscal restraint as the country’s long term financial picture rapidly deteriorates, proved that he would not be the Fourth Turning Grey Champion leader.

In retrospect, neither McCain nor Romney would have united the country, as they are both crony capitalist establishment figures. The mood of the country has darkened substantially in the last year as people are fed up with their deteriorating economic circumstances, sick of both political parties, and angry at the unrestrained illegal immigrant invasion on our southern border.

I’m beginning to believe the nation will not be unified behind a common cause when the coming financial eruption unleashes molten lava of chaos, punishing economic distress, civil strife, class warfare, race wars, and ultimately global war. As Strauss and Howe foretold, the establishment (aka corporate fascist military industrial surveillance state) has seen a sequential loss of popular trust as their blatant corruption, sociopathic stranglehold on the levers of power, and unrelenting greed have angered the critical thinking aware citizens of this country. The next leg down in this Greater Depression will sever the remaining trust, disintegrating any remaining support for the existing civic order. What comes next will be heavily dependent upon whether the 5% to 10% of liberty minded believers in the Constitution are able to gain the trust of the masses. The odds will be long, but no longer than they were during that bitter winter at Valley Forge in 1777-1778.

“It could be a series of downward ratchets linked to political events that sequentially knock the supports out from under the residual popular trust in the system. As assets devalue, trust will further disintegrate, which will cause assets to devalue further, and so on. Every slide in asset prices, employment, and production will give every generation cause to grow more alarmed. With savings worth less, the new elders will become more dependent on government, just as government becomes less able to pay benefits to them. Before long, America’s old civic order will seem ruined beyond repair.” – The Fourth Turning – Strauss & Howe – 1997

In Part 2 of this article I will ponder possible Grey Champion, prophet generation leaders who could arise during the regeneracy, try to assess which channels of distress are likely to burst forth with the molten ingredients of this Fourth Turning, and lastly make some guesses about potential climaxes.

[Fenix]

The Petroyuan Cometh: Launch Of Renminbi-Denominated Oil Futures Contract Imminent
Submitted by Tyler D.
09/11/2015 20:05 -0400

Whenever one talks about the death of the petrodollar, the unspoken question lurking just beneath the surface is this: is the rise of the petroyuan just around the corner?

This year, we’ve gotten quite a bit of evidence to suggest that the answer to that question may indeed be a resounding “yes.” In May for instance, Russia surpassed Saudi Arabia as the largest oil supplier to China and what’s especially notable there is that beginning in 2015, Gazprom began settling all of its crude sales to China in yuan meaning that, at least partly, the petrodollar was supplanted just as soon as its death became inevitable.

Now, just as China has moved to play a greater role in determining the price of gold by participating in the LBMA auction and by establishing a yuan-denominated fix, it's moving quickly to create a yuan-denominated oil futures contract. Here’s Reuters:

China's push to establish a crude derivatives contract has been met with early scepticism, but oil executives say the country's growing economic influence means a third global crude benchmark is inevitable.



A derivatives contract would give the Shanghai International Energy Exchange, known as INE, a slice of an oil futures market worth trillions of dollars, offering a rival to London's Brent and U.S. West Texas Intermediate (WTI).



And while others have tried and failed, China brings its might as the world's biggest oil buyer, a strong dose of political will and the alignment of its financial and banking system for a yuan-denominated contract.



"The energy industry is still manned, literally, by people from the West. But the world moves on, and there's a change of guard," said a senior market executive, speaking on the sidelines of a major industry gathering in Singapore this week, at which delegates spoke on condition of anonymity.



"China has become the world's biggest oil trader, and that means that an oil price will be set there, like it or not."

To be sure, some people do not and China's recent adventures in propping up both the stock market and the yuan have, in the minds of many, served to reinforce the notion that when things aren't going Beijing's way, it will simply force the issue. Some fear the same thing could well happen with RMB crude futures:

"The market doesn't like the idea of a benchmark dominated by the world's biggest consumer, where the regulator is suspected of having the goal of lowering prices," said an executive with a non-Chinese exchange in Asia, speaking at the same event.

But skeptics may have to choose between the lesser of two (perceived) evils because as we saw last month in Singapore, pricing off Dubai leaves everyone subject to perplexing anomalies like what happens when mysterious trading between two Chinese SOEs ends up throwing the market into backwardation at a time when common sense dictates that everyone should be doing the contango tango.

The current benchmark for pricing oil in Asia in the absence of a derivatives contract is the Dubai crude assessment, run by Platts, part of McGraw Hill Financial, where trading in a specified time-frame is used to assess a daily price.



Yet traders have been concerned at heavy trading by China's state-owned Chinaoil and Unipec, which pushed up Middle East grades even as other grades were being pressued lower, and left other companies struggling to take part.

Essentially, it looks like Chinaoil and Unipec may be gaming the Platts Dubai MoC (although no one knows exactly why) and that has implications for all kinds of people including (obviously) Saudi Arabia, Iran, and Iraq, as well as refiners and traders like Mercuria and Glencore. The hope is that a RMB contract will help solve the "problem."

In any event, it makes no more sense to exclude the world's largest oil buyer from crude benchmarking than it does to keep the world's largest producer and consumer of gold out of the gold price-setting process, which is why, in short order, China will be heavily involved in both. And as for widespread adoption of the new contract, that, like the internationalization of the yuan and the demise of the petrodollar, is only a matter of time:

"One-by-one, the oil-majors will start to participate, then others will follow," said an executive with a Western oil major. "While it might take some time to establish itself due to choppy markets and regulatory hurdles as well as the fact that it would introduce a foreign exchange element to crude futures, it is overdue for a Chinese contract to established."

[Fenix]

Remembering 9/11: The Wolf In 'Patriot Act' Sheep's Clothing
09/11/2015 11:11 -0400
Submitted by Thad Beversdorf

This is a piece I wrote last year for Ron Paul’s Voices of Liberty. Now although mainstream media has all but put a gag order on 9/11 memorial coverage, I believe this article’s message has never been more relevant and so I’m posting again at what is obviously poignant time. I find it odd that we have 10 Hollywood blockbusters made each year about the holocaust 75 years on, but only 14 years after the event American media will no longer discuss 9/11, even upon the anniversary. It is perhaps the most telling phenomenon about the secretiveness and mystery surrounding the horrific tragedy.

It was the sixth week of my first job fresh out of college. I was still eagerly excited for each new day. Having moved stateside from a small town in Canada to finish up university and then on to the big city of Chicago, I was still in awe of America. I was working in the north building of the Chicago Mercantile Exchange on the corner of Madison and Wacker. It was early morning and I was on the phone with Paul Salvio from our New York office when...

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...the phone went dead.

The day was September 11, 2001. Our New York office was on the 92nd floor of the World Trade Center Tower 1. None of the employees who had arrived to work that day survived. It is a moment that elicits strong emotions within me to this day and I know I’m not alone.

In the days and weeks that followed, while the world came together to mourn those lost and to condemn those responsible, our policymakers in Washington were working feverishly to find opportunity in this tragedy. Forty-five days after 9/11, President Bush signed into law the U.S. Patriot Act.

The implication of the ironically titled bill is well described by a report published in March 2009 by the American Civil Liberties Union (ACLU). The report, called “Reclaiming Patriotism,” suggests that the Patriot Act “fundamentally altered the relationship Americans share with their Government.”

Politicians took advantage of a moment of extreme duress for the American people to push through a bill that not only breached the spirit of the Constitution and the Bill of Rights but also directly contradicts the rights guaranteed under the 1st and 4th Amendments. The Patriot Act gave powers to the executive branch of our government it was never meant to have. Such restriction of powers was mandated by the founding fathers through the legal framework of which this nation is governed; a legal framework of which each legislator is sworn to uphold upon taking office.

The ACLU’s 2009 report provides an interesting and unintended perspective on the fundamental dangers of the Patriot Act because it was published prior to revelations made by National Security Agency contractor Edward Snowden. Note the following excerpt from the ACLU 2009 report:

“Worse, it authorizes the government to engage in this expanded domestic spying in secret, with few, if any, protections built in to ensure these powers are not abused, and little opportunity for Congress to review whether the authorities it granted the government actually made Americans any safer.” ?

But such fears were repeatedly calmed by those who were handed the authority over and entrusted with such powers.



And so, we see, concerns about Patriot Act abuses at the time of the ACLU report were only hypothetical and thus easily and reassuringly refuted by those in charge of the surveillances being done under the authority of the Patriot Act.

And then Edward Snowden entered the room...



Snowden revealed that not only were the very abuses predicted by the ACLU taking place but they were part of a larger and well defined strategy that had been intentionally hidden from the American people.

Many of the surveillance programs revealed by Snowden are part of subsequent legislative bills that fall under the umbrella and authority of rights granted by the Patriot Act. In a sense it has become the “Pandora’s box” against the rights and freedoms of the American people. Since the Patriot Act opened the floodgates, we’ve had a steady stream of bills further expanding the (illegal) powers to those in charge.

The claims that these programs are unlawful are not simply laymen opinion. Several courts across the nation have heard various cases and determined that many aspects of the programs are in breach of the U.S. Constitution. ? Yet, no one has been prosecuted and the programs under the Patriot Act not only continue but are expanding.

History and common sense tell us that those in power will always attempt to beget more power. Several independent studies prove that these programs have very little impact on protecting Americans from terrorism while the Snowden leaks evidence the wide abuses taking place for political motivations. The Patriot Act has become the enemy it claims necessitates its existence. It is the most prolific form of terrorism against the American citizenry (and many of our allies) today.

The argument so often touted by beneficiaries of the Patriot Act is that trading freedom for safety is an acceptable trade. That argument is not only invalid it is unsound. Freedom and safety are not mutually exclusive and even if they were the slippery slope aspect of such way of thinking makes it a false proposition. If you haven’t done so, you must fully examine the Snowden revelations to comprehend the extent of the tyranny authorized and enacted by the Patriot Act and its subsidiary Acts.

Let me bring this to a sharp point for any who have yet to feel it—a terrible thing happened to this nation on 9/11 that none of us expected ever would. We felt vulnerable for maybe the first time within the borders of our nation, the strongest nation on this earth. It changed many of us in very profound ways. At that point, in that moment, all we wanted to feel is that it would and that it could never happen again. And so we entrusted our leaders to work together on implementing policies that would ensure our freedom be safe from those who want to take it from us.

The Patriot Act was sold to Americans as a shield to defend our freedom, that it was to ensure our rights as guaranteed by our constitution and the Bill of Rights would be safe from evildoers. However, the sad reality is that our leaders took our moment of need as an opportunity to further enhance the powers of the state over the power of the people. We know this now thanks to some incredibly brave and heroic Americans like Snowden who gave up their individual freedom to defend the freedom of a nation. It is on the rest of us now to stand up to the tyranny of those whose interests are narrow and selfish and whose lies and deceit represent the most monumental and immediate threat to our freedom.

[Fenix]

Geopolitical Risk, Significant Chinese Demand Supporting Gold
Submitted by GoldCore on 09/11/2015 08:30 -0400

DAILY PRICES
Today’s Gold Prices: USD 1106.35, EUR 980.85 and GBP 716.87 per ounce.
Yesterday’s Gold Prices: USD 1107.75, EUR 989.73 and GBP 720.32 per ounce.
(LBMA AM)

Gold rose 0.7% on the COMEX yesterday and rebounded from a one month low. The most active gold contract for December delivery gained $7.30, or nearly 0.7 percent, to settle at $1,109.30 per ounce. Gold rebounded on what appears to have been short covering and a bit of safe haven buying.

Gold in USD – 1 Week

Falling European equities indices likely supported gold and gave a safe haven bid. Yesterday, the FTSE 100 Index, fell 1.2 percent, while French stock market benchmark index CAC 40 was also down 1.46 percent. Asian share were mixed but mostly marginally down overnight and European shares are marginally lower again this morning.

Gold in Singapore was marginally lower and in early European trading gold remained under pressure. Silver, platinum and palladium are all also a bit weaker, with palladium the biggest faller, down 1.2% today.

Still gold is currently set for a third straight week of marginal losses. Unless, we rally sharply before the end of the day, gold is set for a 1.2% fall this week. Silver conversely is higher this week and is up nearly 1%.

Palladium, which Russia has a near monopoly in terms of production, is outperforming, however, on a weekly basis, with a gain of 1.6% this week. Platinum's down 1.2% for the week.

Global demand for coins and bars remains robust and this is especially the case in China. One such indication of that demand is that yesterday, the Hong Kong CME contract saw the highest daily withdrawals of gold kilo bars from the exchange at 19.178 tonnes.

Another indication is the massive Chinese gold bullion imports from the United Kingdom have seen a significant uptick this year. In the first half of 2015 they are at a whopping 112 tonnes, compared to 110 tonnes for the full year in 2014.

This very significant increase likely reflects increased official Chinese demand. The PBOC is continuing to build its gold reserves in a bid to rival the near 8,500 metric tonnes that the U.S. is believed to have. The PBOC announced another increase to their reserves this week and they now stand at 1,693 metric tonnes - less than 20% of the reputed U.S.’ reserves.

Bullion buyers expect higher prices due to a combination of geopolitical, macroeconomic and monetary risk.

The Middle East is increasingly volatile and we appear to on the brink of a war in the region. This comes at a time of deep tensions with an increasingly assertive Russia.

Geopolitical risk remains high given increasing chaos in much of the Middle East and rising tensions between NATO and Russia. Russian forces have joined military operations supporting government troops in Syria, Reuters reports and today come reports from media in Israel that Iranian troops have joined their Russian counterparts.

Turkish warplanes bombed Kurdistan Workers Party (PKK) targets in northern Iraq overnight, a security source told Reuters this morning. This is the latest in a series of daily air strikes on the militants as conflict surges in southeast Turkey, Iraq and much of the Middle East.

A further deterioration in the situation in the Middle East including western powers bombing Syria and a likely Russian military response - would likely lead to a sharp escalation in safe haven gold buying.

There is also the ongoing risk of terrorism. Were ISIS to launch a terrorist spectacular on western soil, it could be expected to come on the anniversary of September 11th, 2001. The ‘911’ anniversary is today.

Given the confluence of still elevated geopolitical, systemic and monetary risks, we are bullish as we enter the seasonal 'sweet spot' for gold in the autumn period prior to Indian festivals and Chinese New Year.

Gold looks to be in the process of bottoming and while the technicals remain quite weak, the fundamentals - of an uncertain global economy, volatile and vulnerable stock markets and robust global demand for gold, particularly from China - are quite positive.



IMPORTANT NEWS

Gold snaps a 10-session string of losses – MarketWatch
“Bullion buyers expect higher prices due to a combination of geopolitical, macroeconomic and monetary risk” – MarketWatch
Gold and Oil Back in Favor as Commodity Funds See First Flows in 6 Months – Bloomberg
LME says in talks on launch of precious metals derivatives – Reuters
Iranian troops join Russians in Syria fighting – Yedioth Internet

IMPORTANT COMMENTARY

Brazil reduced to junk as BRICs facade crumbles – The Telegraph
It is in Warsaw not Athens that the march of the euro will be halted – The Telegraph
Precious metals – Keep holding gold – Money Week
Silver Price Forecast: Rush to Physical Silver Indicates System is On the Verge of Economic Collapse – Profit Confidential
QE4 is coming warns ‘Dr. Doom’ Marc Faber so buy gold! – Arabian Money

Read More News and Commentary

[Fenix]

Sep 11 - David Tepper: Good Time To Take Money Off The Tablev

Submitted by Pivotfarm on 09/10/2015 19:40 -0400

Follow The Market Madness with Voice and Text on FinancialJuice


EMOTION MOVING MARKETS NOW: 15/100 EXTREME FEAR

PREVIOUS CLOSE: 13/100 EXTREME FEAR

ONE WEEK AGO: 11/100 EXTREME FEAR

ONE MONTH AGO: 9/100 EXTREME FEAR

ONE YEAR AGO: 42/100 FEAR

Put and Call Options: EXTREME FEAR During the last five trading days, volume in put options has lagged volume in call options by 23.39% as investors make bullish bets in their portfolios. However, this is still among the highest levels of put buying seen during the last two years, indicating extreme fear on the part of investors.

Market Volatility: NEUTRAL The CBOE Volatility Index (VIX) is at 24.37. This is a neutral reading and indicates that market risks appear low.

Stock Price Strength: EXTREME FEAR The number of stocks hitting 52-week lows exceeds the number hitting highs and is at the lower end of its range, indicating extreme fear.

PIVOT POINTS

EURUSD | GBPUSD | USDJPY | USDCAD | AUDUSD | EURJPY | EURCHF | EURGBP| GBPJPY | NZDUSD | USDCHF | EURAUD | AUDJPY


S&P 500 (ES) | NASDAQ 100 (NQ) | DOW 30 (YM) | RUSSELL 2000 (TF) | Euro (6E) |Pound (6B)

EUROSTOXX 50 (FESX) | DAX 30 (FDAX) | BOBL (FGBM) | SCHATZ (FGBS) | BUND (FGBL)

CRUDE OIL (CL) | GOLD (GC)



MEME OF THE DAY – HEY GIRL…



UNUSUAL ACTIVITY

RHT @$.75 .. SEP 72.5 CALL Activity 3300+ Contracts

IP SEP WEEKLY2 42.5 CALLS @$.62 on offer 1300+ Contracts

KHC SEP 70 PUT ACTIVITY 2K+ @$.50 on offer

KRO Director Purchase 967 @$6.905 Purchase 1,033 @$6.909

TTS SC 13G/A .. Tremblant Capital Group .. 11.69%

More Unusual Activity…



HEADLINES



US Import Price Index (MoM) (Aug): -1.80% (est -1.60%, prev -0.90%)

US Import Price Index (YoY) (Aug): -11.40% (est -11.10%,rev prev -10.50%)

US DOE Crude Inventories (WoW) (Sep 04): 2570K (est 900K, prev 4667K)

US DOE Cushing Inventories (WoW) (Sep 04): -897K (est 400K, prev -388K)

US EIA Natural Gas Storage Change (Sep 04): 68 (est 77, prev 94)

US Wholesale Inventories (MOM) (JUL): -0.1% (EST 0.30%, prev 0.90%)

US Wholesale Trade Sales (MoM) (Jul): -0.3% (est 0.10%, prev 0.40%)

US Initial Jobless Claims (Sep 05): 275K (est 275K, rev prev 281K

US Continuing Claims (Aug 29): 2.26m (est 2.253m, rev prev 2.259m)

US Kansas City Fed LMCI Index (Aug):-0.12(Prev -0.23)

CA New Housing Price Index (YoY) (Jul): 1.3% (est 1.30%, prev 1.30%)

CA Capacity Utilization Rate (Q2): 81.3%% (est 81.70%, rev prev 82.60%)

BoE leaves rates unchanged, McCafferty dissents again in 8-1 vote

ECB Liikanen: Bond purchases will be extended if needed

ECB Praet: Recovery hinges on full implementation of QE

David Tepper: Good time to take money off the table



GOVERNMENTS/CENTRAL BANKS

US's Boehner: Fall Budget Talks To Discuss Disc Spending Hike --MNI

BoE leaves rates unchanged; McCafferty dissents again in 8-1 vote --Rtrs

ECB Liikanen: Bond purchases will be extended if needed --ForexLive

ECB Praet: Cyclical recovery hinges on full implementation of QE --ForexLive

Riksbank's Skingsley: Economic activity is improving --Riksbank

Reuters poll sees RBNZ cutting interest rates again in October --ForexLive

Greek Interim FinMin: There will be no bail-in of Greek bank deposits --BBG

GEOPOLITICS

Putin To address Syria and ISIS in UN speech later this Month --Rtrs

FIXED INCOME

US sells 30-year bonds at 2.980% vs 2.990% WI --ForexLive

Apple and Shell sell over E1bn of debt --FT

European banks flock to issue dollar bonds --FT

FX

USD: USDJPY shows a reluctance above the 200 day MA --ForexLive

GBP: BoE Minutes see considerable uncertainty over impact of GBP on inflation --ForexLive

GBP: BoE Minutes see considerable uncertainty over impact of GBP on inflation --ForexLive

EUR: EUR/JPY onto 136 handle on strong rally --FXstreet

CNY: PBoC Adviser Huang: Yuan should not be pegged to USD --BBG

CNY: PBoC Lowers Criteria For Cross Boarder Yuan Pooling --Business News

CNY: China Premier Li: No basis for persistent yuan depreciation --FXStreet

ENERGY/COMMODITIES

WTI futures settle +4% at $45.92 per barrel

Brent futures settle +2.75% at $48.89 per barrel

US DOE Crude Oil Inventory Change (WoW) (Sep 04): 2570K (est 900K, prev 4667K)

US DOE Cushing Crude Inventory Change (WoW) (Sep 04): -897K (est 400K, prev -388K)

US DOE Gasoline Inventory Change (WoW) (Sep 04): 384K (est -150K, prev -271K)

US DOE Distillate Inventory Change (WoW) (Sep 04): 952K (est 900K, prev 115K)

US DOE Refinery Utilization (WoW) (Sep 04): -1.90% (est -0.50 %, prev -1.70%)

US EIA Natural Gas Storage Change (Sep 04): 68 (est 77, prev 94)

CRUDE: Saudi Arabian oil output down 100k bpd in August

CRUDE: Kuwait: OPEC Not Keen To Shoulder Impact Of Price Decision

AGS: World food prices fall sharply in August, extending slide --Rtrs

LNG: LNG pipeline project could see more delays --Washington Times

US shale giants turn to 2016 with somber outlook --RTRS

EQUITIES

S&P 500 unofficially closes up 0.5% at 1,952

DJIA unofficially closes up 0.45% at 16,327

Nasdaq unofficially closes up 0.8% at 4,795

David Tepper: Good time to take money off the table --CNBC

M&A: GE plans to sell asset management arm --FT

M&A: EU to rule on $16.7bn Intel/Altera deal by 14/Oct --Rtrs

M&A: Avon shares surge on deal report --FT

BANKS: EU's Vestager Confident' of reaching agreement with Italy on bad bank --Rtrs

INSURANCE: Lloyd's of London H1 profit drops as competition bites --Rtrs

TECH: Google rolls out Android Pay in US --Rtrs

TECH: Dell says to invest $125 bln in China over five years --CNBC

INDUSTRIALS: GE to decide on new location for HQ in Q4 --CNBC

TECH: 3M to could spin off or sell its health information systems business --MW

CRA: Moody's affirms Glencore's Baa2 ratings with negative outlook

EMERGING MARKETS

China is a source of global growth, not risk, says Li Keqiang --FT

Fitch: US Money Market Funds' Exposure to China Slowing

Brazil Rousseff Promises New Fiscal Effort; Analysts Skeptical --MNI



Brazil credits resilient after junk rating --Rtrs