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It was the deep of illiquid night when the momentum ignition trading algos struck. Out of the blue, a liftathon in all JPY crosses without any accompanying news sent the all important ES leading EURJPY surging by 50 pips, which in turn sent both the Nikkei up over 1% in minutes, and led to an E-Mini futures melt up of just about 8 points just when everyone was going to sleep.

All of this happened completely independent of the actual data, which was chiefly European retail sales which missed (-0.6%, Exp. 0.4%, prior revised lower to 0.5%), Eurozone Service PMI which dropped (from 52.2 to 51.6) but beat expectations of 50.9 (notably the Spanish Service PMI of 49.6, up from 49.0 saw its employment index drop from 46.5 to 45.3, the lowest print since June), and finally, German Factory Orders which surged from last month’s -0.3% to +3.3% in September. And while all this impacted the EUR modestly stronger, it had little if any residual effect on the ES. The bigger question is whether these slightly stronger than expected data point will offset the ECB’s expected dovishness when Mario takes to the mic tomorrow).

Looking at today’s calendar, there is a bit of a mid-week lull before we head into the business end of the week (ECB meeting tomorrow and payrolls/Bernanke on Friday). With largely irrelevant European data out of the way the main remaining US-based data releases are mortgage applications and the leading index. The Cleveland Fed’s Pianalto speaks on housing and the economy towards the end of the US trading day.

Market Recap from RanSquawk:

Despite the looming risk event (ECB policy meeting), stocks traded higher, as market participants used yesterday’s sell-off as an opportunity to re-establish longs. At the same time, Bunds also remained bid, albeit marginally but were again dragged lower by Gilts which underperformed the benchmark German equivalent following the release of yet more solid UK macroeconomic data (Manufacturing/Industrial Production). Looking elsewhere, the release of the latest Eurozone Retail Sales report, as well as Eurozone based services PMIs failed to have a meaningful impact on the price action, which remained range bound for much of the session. Going forward, market participants will get to digest the release of the latest Challenger Job Cuts report, Weekly DoE data and also earnings by Time Warner and QUALCOMM.

Overnight bulletin summary from Bloomberg and Ran:

• Eurozone Retail Sales (Sep) M/M -0.6% vs. Exp. -0.4% (Prev. 0.7%, Rev. to 0.5%) and Eurozone Services PMI (Oct F) M/M 51.6 vs. Exp. 50.9 (Prev 52.2).
• German Factory Orders (Sep) M/M 3.3% vs. Exp. 0.5% (Prev. -0.3%)
• UK Industrial Production (Sep) M/M 0.9% vs. Exp. 0.6% (Prev. -1.1%) and UK Manufacturing Production (Sep) M/M 1.2% vs. Exp. 1.1% (Prev. -1.2%)
• Treasuries steady, 10Y yield holding above 100-DMA, as market waits GDP and nonfarm payrolls on Friday for more clues on possible Fed tapering; ECB rate decision due tomorrow.
• A pair of research papers by high-ranking Fed staffers make the economic case for prolonging stimulus by targeting a lower unemployment rate and a bigger window for inflation
• SF Fed’s John Williams said economic growth in recent months has fallen short of his expectations, partially eroding his confidence gains in the  labor market will endure without monetary stimulus
• German factory orders increased more than estimated 3.3% in September, more than forecast
• U.K. industrial production rose 0.9% in September, more than economists forecast, helped by a rebound in manufacturing after a slump the previous month
• New Zealand employment increased 1.2%, or by 27,000 jobs, from the 2Q, the most since early 2007
• Sovereign yields mixed, EU peripheral spreads narrowing. Nikkei +0.8%, Shanghai falls 0.8%. European stocks, U.S. equity-index futures gain. WTI crude, gold, copper higher

Key US events:

US: Fed speaker Pianalto (13:10)
US : MBA mortgage applications, cons n/a (7:00)
US : Leading index, cons 0.6% (19:00)

Asian Headlines

BoJ Minutes for the October meeting said Japan’s economy is recovering moderately and is expected to continue moderate recovery. According to the minutes, members said that consumer prices will likely rise gradually, while a few members said a rise in inflation expectations was moderate and that the pace of export recovery and output lacks strength.

EU & UK Headlines

As part of the ECB stress tests, sovereign debt holdings of Eurozone banks will not be counted toward the final assessment, according to unsourced reports.

German Factory Orders (Sep) M/M 3.3% vs. Exp. 0.5% (Prev. -0.3%)
Eurozone Retail Sales (Sep) M/M -0.6% vs. Exp. -0.4% (Prev. 0.7%, Rev. to 0.5%)
Eurozone Services PMI (Oct F) M/M 51.6 vs. Exp. 50.9 (Prev 52.2)
German Services PMI (Oct F) M/M 52.9 vs. Exp. 52.3 (Prev. 53.7)
French Services PMI (Oct F) M/M 50.9 vs. Exp. 50.2 (Prev. 51.0)
Italian Services PMI (Oct) M/M 50.5 vs. Exp. 51.2 (Prev. 52.7)
Germany sells EUR 3.268bln in 1.00% 2018, b/c 2.3 (Prev. 2.0) and avg. yield 0.71% (Prev. 0.81%), retention 18.3% (Prev. 16.3%)
UK Industrial Production (Sep) M/M 0.9% vs. Exp. 0.6% (Prev. -1.1%)
UK Manufacturing Production (Sep) M/M 1.2% vs. Exp. 1.1% (Prev. -1.2%)
Industrial Output 2.2% (Sep) Y/Y – strongest annual rate since Jan 2011. Industrial Output adds 0.002% to UK Q3 GDP, impact therefore minimal.

US Headlines

Fed’s Williams (Non-Voter, dove) expects growth to accelerate in early-2014 and said that growth is weaker than expected a few months ago. At the conclusion of the QE program, the Fed should announce an end instead of keeping it open-ended, according to Williams.

Equities

Stocks traded higher this morning, as market participants largely disregarded the looming risk event and used the sell off observed yesterday as an opportunity to re-establish longs. Technology and consumer services sectors led the move higher, although the risk on sentiment ensured that all major sectors traded in positive territory.

FX
GBP/USD outperformed its major counterpart EUR/USD yet again, supported by the release of yet another solid UK based macroeconomic
data. Broad based rebound by EUR following yesterday’s aggressive sell-off weighed on the Greenback, with the USD index down 0.27% at
1108GMT. Elsewhere, NZD was supported overnight trade following the release of New Zealand jobs data where the Unemployment Rate
printed at 6.2% as expected but Employment Change beat expectations at 1.2% vs. Exp. 0.5% Q/Q.
Of note, Goldman Sachs said the RBA is just about done, but it still sees a cut, adding that the strength of AUD is pressing the central bank
to cut rates.

Commodities

Iranian foreign minister said believes Iran can reach a framework agreement on nuclear talks this week, but not necessary to do so.

The Eni CEO has said that its Libya terminal is under attack by protestors in an attempt to stop exports, as reported by ANSA.

Furthermore for Libya according to Union, Libya’s Hariga port not open for exporting crude as former petroleum facility guards are not allowing tankers to enter the Haringa port.

US API Crude Oil Inventories (Nov 1) W/W 871k vs. Prev. 5900k
Cushing Crude Inventory (Nov 1) W/W 999k vs. Prev. 2200k
Gasoline Inventories (Nov 1) W/W -4300k vs. Prev. 740k
Distillate Inventory (Nov 1) W/W -2700k vs. Prev. 815k

Chinese metal and
mining companies could be facing a heightened risk of write-downs, according to Barclays’s analysis of earnings reports from the June-September quarter.

SocGen recaps the key macro headlines:

FX volatility stayed bid overnight even as USD gains have been whittled back, but EM currencies continue to struggle as rates from Brazil to South Korea are backing up. Brazil central bank head Tombini sounded a warning to stay vigilant on inflation yesterday and a surprise 3.5 percentage point jump in US ISM non-manufacturing employment added to the corrective price action as UST yields rose above 2.64%, a key technical level. US leading indicators for October are proving that the government shutdown has had a trivial impact on private sector hiring, and consequently, investors are now readjusting underweight USD positions. How far can this run? The repositioning vs a low initial payroll consensus estimate of 120k may have further to go, but much will depend on how much US payrolls surprise on Friday. A 140k gain would not bring Fed tapering any closer and the back up in yield we are seeing would swiftly run out of steam. This makes it tricky to call the next move.

A lot also rides on the ECB meeting tomorrow – simply put, the market will be disappointed if there is no dovish signal. For EUR/USD, the 1.3455 level remains key, and yesterday’s price action shows that bulls will not throw in the towel easily with scattered buying reported by different types of accounts on EUR dips. Currencies displaying a strong correlation with US 10y yields were the biggest losers yesterday. These include the BRL, MXN and ZAR. The 4.7% move in USD/BRL since last week has propelled the pair to close to the pivotal 2.30 level. A break could spell more trouble and a potential return to 2.40 if the push higher in US yields carries on.

EUR/GBP fell to a fresh one-month low of 0.8385 in Asia following on from the sharp retreat yesterday. A surge in the UK services PMI to 62.5 boosted optimism of a further acceleration in Q4 GDP growth to above 1% qoq. The BoE has its homework cut out ahead of the Inflation Report next week. An upward revision to GDP (and inflation?) forecasts is now likely and will keep the debate going over the timing of a first rate hike. On this basis and with a potentially dovish ECB lurking tomorrow, momentum is behind a return of EUR/GBP to the October low of 0.8332.

Final services PMI data from the eurozone are not expected to reveal any shocks this morning. Nor are German new industry orders, but we expect the 2018 bond tap (EUR4bn) to show only moderate demand given the relatively poor value to the curve. Germany has so far achieved 88% of this year’s issuance programme compared to 86% at the same stage last year. In the UK, manufacturing output is forecast to have gained 1.1%, reversing the 1.2% contraction of August. In EM we look for the Polish central bank to keep its benchmark rate on hold at 2.50%.

DB’s Jim Reid concludes the overnight recap:

The prospect of an earlier taper, offset to some extent by later rate hikes, weighed on treasury markets yesterday. 5yr, 7yr and 10yr UST yields added 1bp, 3bp and 5bp respectively. A better than expected US ISM nonmanufacturing report for October added further momentum to the sell-off. The headline print came in at 55.4, which is 1 point higher than the previous months’ reading and beat Bloomberg consensus expectations by 1.4 points. Our economists highlight that the headline was led by a large 3.5 point jump in employment to 56.2 which is the highest reading since August when nonfarm payrolls grew by +193k. DB are projecting a +130k increase in Friday’s October employment report, but the ISM figures impart some mild upside risk to that forecast.

Indeed it was a weak day for most fixed income markets as markets turned bearish on duration. We saw softness across bunds (+7bp), OATs (+7bp) and gilts (+10bp) which accompanied the selloff in EM fixed income. The underperformance of gilts was attributed to another strong UK economic report – this time the service sector PMI – which came in at 62.5 against expectations of 60.0. EURGBP fell 0.8% yesterday and is down more than 2% over the last five days. Credit spreads were pulled wider across cash and indices; but that backdrop didn’t dampen activity in the primary markets though, with over US$14bn of investment grade deals launch yesterday across 21 tranches on Tuesday (Reuters). The S&P500 managed to claw its way back from early lows of -0.7% but a late drop saw the index close weaker (-0.28%) for just the fifth time in 20 trading days.

Looking at today’s calendar, there is a bit of a mid-week lull before we head into the business end of the week (ECB meeting tomorrow and payrolls/Bernanke on Friday). The final PMI services numbers for Europe are due out shortly after we go to print, which will be followed up by  German factory orders for September. A German 5yr bund auction will take place today. In the US, the main data releases are mortgage applications and the leading index. The Cleveland Fed’s Pianalto speaks on housing and the economy towards the end of the US trading day.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/2xpAOpsGPos/story01.htm Tyler Durden

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Money doesn’t smell of anything except money and wherever it comes from it gives off the same whiff of intoxicating magnetic attraction. Money, where some are concerned, is good wherever you get it from, but the only problem with that is there are times when the policies of some are in complete contradiction with that, but they soon give off some spin to show just how they are doing it the way they should be. Right now, one of those spin artists is the Chancellor of the Exchequer of the UK George Osborne and the British government along with it. Money has no smell for the Brits

UK Beliefs

David Cameron and the British government were one of the first in the EU to speak out about immigration and the dangers of allowing hundreds of thousands of people enter the country in the age-old discussion of the migrant mythological creature that stole our jobs and probably our women and was only here for one thing: money. He also stated that the migrants came for the British Welfare State, which in itself is nothing more than a patriotic belief.

• The British might believe that they invented the concept of the Welfare State and the Social Security in 1910 with health freely available to all.
• However, that is in itself not true since it was Chancellor Bismarck of Germany that did so in the 1880s; although the British were perhaps the first to destroy it.
• Who would actually go to the UK to get treated on the British National Health System?
• If you go to hospital in the UK, you have 50% more chance of dying because you are going to be badly treated than in any other country in the Western world.
• You would have to go to emerging countries to find figures like that.
• The British have 5 times more chance of dying from pneumonia in hospital than in the US and they will have twice the chance of been diagnosed with blood-poisoning.
• Naturally, the immigrants are flocking to the white cliffs of Dover just to get into a British hospital.
• There’s one thing being patriotic and then there’s downright proof of pulling the wool over your eyes.
• The immigrants would go elsewhere if they had the chance of getting better treatment from a welfare state.
• There are 70, 000 Brits that actually decide to go abroad every year to get treatment in other countries.
• Immigrants would hardly go to the UK either to claim £55 per week on unemployment benefits when they could get it much better elsewhere (if that were the real reason they were going to a country).

On September 29th 2013 David Cameron gave an interview in the UK where he said that Muslim veils should be banned in schools and in courts and that he would back anyone up that wished to do it.

This is the man that stated that young migrants were not integrating into British culture and that the British had been too soft on agreeing to forego their cherished national identity (as many other nations also did after the financial crisis struck).

Scapegoating is always good for the polls. It takes the blame off the real people who are responsible, doesn’t it and diverts the attention of the public? Spin!

That is despite the fact that ‘national identity’ is a complete myth as no two British people will have the same notion of what identity is and anyway the majority of national identities were entirely constructed after the founding of the nation. They are based on invented stories or people that never existed and that have entered heroic status of the country such as King Arthur or Robin Hood for the UK; simply invented in order to provide origins that are so far off in the past that the British might believe that they were ‘the first’, that they have earned their right to be ‘here’ and that the traits that those people or places might embody (sharing, justice, valor, courage, etc.) should be espoused by the nation. Naturally, all British people are sharing and caring and they all respect justice and are brave souls.

British Contradiction

George Osborne and David Cameron now wish to establish the UK as the biggest Islamic financial center outside of the Islamic world: “the first sovereign to issue an Islamic bond outside the Islamic world” as stated by George Osborne in an interview with the Financial Times. He wishes to issue a $323 million sukuk (a bond that complies with Islamic Sharia law).

George Osborne is under the impression that the UK will be the first to do so outside of the Islamic world, whereas the German federal state of Saxony-Anhalt did so in 2004 (issuing a bond worth $123 million).

Beyond the contradiction of condemning and perhaps even stigmatizing certain parts of the population in the UK and around the world, the British government has no qualms about becoming a financial hub for Islamic finance and banking.

Clearly, money has no smell.

But, it is true that Islamic finance and banking may have something that is very good in today’s bankster world: it is not linked to a tradable commodity and it has no value that is linked to time. Speculation is therefore discouraged, money is always linked to the economy (the real economy and not the virtual one). Prices would be less volatile if we used that sort of finance. Both profits and losses have to be shared by everyone, not just by one party.

• The British have certainly cottoned on to the fact that Islamic finance is increasing 50% faster than traditional types of banking in the world.
• Today Islamic banking only represents 1% of transactions that are taking place. But, that looks as if it is set to change.
• Sharia-compliant assets around the world amount to $1.8 trillion today.
• That is an increase from $1.3 trillion in 2011.

In other words, the subprime crisis would never have been possible. Sharia-compliant mortgages lend money to people, but the house remains the property of the lender. The buyer pays a rent until the property has been fully bought. There is no interest rate that can go up or down.

It is doubtful whether or not George Osborne is doing it for the good of the British economy or to get around the problems of speculation on the financial markets, or whether he is indeed under the impression that Sharia-compliant finance is better and the way forward. Whatever happens, it seems somewhat of a contradiction to pick n’ mix economic and national policies at will.

Money Has No Smell

It was the Roman Emperor Vespasian that first said that ‘money has no smell’ (pecunia non olet). He had passed a tax on tanners that used urine to cure their hides. He held a coin to his son’s nose asking him if it was offensive. His son replied ‘no’, to which Vespasian replied ‘money has no smell,
and yet it comes from urine’. The British believe that money has no smell and you can just imagine George Osborne holding that British penny up to Cameron’shooter down at number 10. They are in contradiction of their policies believing immigrants to be (at least publically-speaking) the cause of all ills in the UK, rather than actually dealing with the problem itself of the economy.

They know full-well that it is easier to blame the migrants, since they will never be able to deport them all from the country. They will, therefore, never be able to solve the problem of their economic dilemma. Their predicament will last and their scapegoat will be present to constantly blame. End of story.

The migrants are the problem for the British government apparently, but their money doesn’t smell, does it?

Originally posted: Money Has No Smell for Brits

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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/FRJLvl9tW-I/story01.htm Pivotfarm

Submitted by Michael Krieger of Liberty Blitzkrieg blog,

The cruelty inherent in animal factory farming is something that we as a species should find completely and totally unacceptable. Indeed, evidence shows that when people are exposed to the nightmarish conditions faced by factory animals prior to consumption they demand change. This is precisely why corporate interests have pushed ag-gag laws throughout the nation in an attempt to criminalize the exposure of these methods.

I am sure many of you have already been exposed to videos of shocking animal cruelty before. Even if you have, the video below created by Mercy for Animals is a very important watch. It exposes unthinkable abuse of tiny, helpless pigs for absolutely no good reason. These incidents were filmed at Pipestone System’s Rosewood Farms in Pipestone, Minnesota earlier this year.

WARNING: Parts of this video are extraordinarily disturbing. While I think it is important for people to watch it and be aware, it might be too much to handle for some.

More from the Huffington Post:

Undercover footage that appears to show horrifying conditions at a Walmart pork supplier has prompted investigations at a Minnesota factory farm.

 

Local law enforcement executed a search warrant at Pipestone System’s Rosewood Farms in Pipestone, Minn., on Oct. 9, following a complaint filed by animal rights nonprofit Mercy for Animals. The organization says an undercover private investigator collected first-hand evidence, including video footage, of inhumane treatment of pigs raised and slaughtered at the facility.

 

The hidden-camera footage appears to show pregnant pigs confined in tiny “gestation crates,” pigs being punched and abused, and piglets being thrown on their heads and mutilated without anesthetic.

 

Matt Rice, the director of investigations at Mercy for Animals, told HuffPost the investigator — whose identity has been kept private — spent 10 weeks posing as an employee at Rosewood Farms earlier this year.

 

“Pregnant pigs are confined in tiny metal crates that are just barely big enough to hold them,” he said of the factory farm. “They’re basically immobile for their entire lives. They can’t turn around, they can’t lie down comfortably, and they suffer from large open wounds and pressure sores from rubbing against the bars.”

 

Rice calls these gestation crates — banned in the European Union and in nine U.S. states, including California, Colorado, Florida and Arizona — “one of the most cruel forms of institutionalized cruelty.”

 

Unlike more than 60 other major retailers, including Kroger, McDonald’s, Safeway,Costco and Kmart, which have all refused to work with pork suppliers that use gestation crates, Walmart has not instituted such a policy.

 

The nonprofit says it has conducted at least two dozen such undercover investigations at factory farms, dairy farms, hatcheries and slaughterhouses in recent years — three of which, including the most recent at Rosewood, were at Walmart pork suppliers.

 

“Every single time, our investigators have brought back images that would horrify most Americans,” Rice said. “This is a sign that mutilating animals without anesthesia and confining them in cages so small they can’t turn around are considered standard industry practice.”

Full article here.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/JezFq8vFUEA/story01.htm Tyler Durden

Having described the US as "worse than Japan in the 90s" during his last appearance, ECRI's Lakshman Achuthan remains adamant that (despite Bloomberg TV anchors' insistence that stocks are at all-time highs must mean something) the US has been in recession since last year and remains so. His comments that "you wouldn't have four years of zero-interest rate policy and quantitative easing if everything was okay," are as cogent now as then as he critically explains, as we have noted here and here, that the attention being paid to 'soft data' surveys (such as ISM) is entirely mistaken since ISM/PMIs are now negatively correlated to actual production. The data (hard data doesn't lie) in hand, he notes, suggest downward revisions and well within the range of a mild recession and "the market is disconnected."

1:00 ISM/PMI Debunking

1:50 How disconnected the markets are

2:20 The Secular challenge

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/QalqFPCfB0M/story01.htm Tyler Durden

Having described the US as "worse than Japan in the 90s" during his last appearance, ECRI's Lakshman Achuthan remains adamant that (despite Bloomberg TV anchors' insistence that stocks are at all-time highs must mean something) the US has been in recession since last year and remains so. His comments that "you wouldn't have four years of zero-interest rate policy and quantitative easing if everything was okay," are as cogent now as then as he critically explains, as we have noted here and here, that the attention being paid to 'soft data' surveys (such as ISM) is entirely mistaken since ISM/PMIs are now negatively correlated to actual production. The data (hard data doesn't lie) in hand, he notes, suggest downward revisions and well within the range of a mild recession and "the market is disconnected."

1:00 ISM/PMI Debunking

1:50 How disconnected the markets are

2:20 The Secular challenge

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/QalqFPCfB0M/story01.htm Tyler Durden