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We look forward to more jawboning, more promises, and more hope that fiscal policymakers enact reforms as ECB chief Mario Draghi explains how doing nothing on rates (they are at the limit) and QE (zee Germans) is still the most dovish thing because they might possibly maybe kinda sorta do it in the future…

 

• *DRAGHI SAYS ECB TODAY WILL DISCUSS INFLATION STRATEGY: CORRIERE
• *DRAGHI SAYS ECB COMMITTED TO INFLATION TARGET: CORRIERE SERA
• *DRAGHI SAYS FISCAL POLICY NEED TO PLAY KEY ROLE: CORRIERE SERA
• *DRAGHI SAYS STRUCTURAL REFORMS NEEDED TO SUPPORT FISCAL POLICY

 

Draghi Live Feed:

via Zero Hedge http://ift.tt/1mUC6EB Tyler Durden

We look forward to more jawboning, more promises, and more hope that fiscal policymakers enact reforms as ECB chief Mario Draghi explains how doing nothing on rates (they are at the limit) and QE (zee Germans) is still the most dovish thing because they might possibly maybe kinda sorta do it in the future…

 

• *DRAGHI SAYS ECB TODAY WILL DISCUSS INFLATION STRATEGY: CORRIERE
• *DRAGHI SAYS ECB COMMITTED TO INFLATION TARGET: CORRIERE SERA
• *DRAGHI SAYS FISCAL POLICY NEED TO PLAY KEY ROLE: CORRIERE SERA
• *DRAGHI SAYS STRUCTURAL REFORMS NEEDED TO SUPPORT FISCAL POLICY

 

Draghi Live Feed:

via Zero Hedge http://ift.tt/1mUC6EB Tyler Durden

Despite promises by all asunder that any Ebola epidemic in America will be “contained” the dreadful news this morning appears to confirm this is not the case. From one patient, Eric Duncan, just 2 days ago, to 4 schools and 18 people yesterday (according to Texas Governor Rick Perry) to today where NBC News has confirmed with the Dallas county health and human services that 80 people came into contact with the Dallas Ebola patient or his family (including 12-18 direct). The ambulance workers are also under close watch after Duncan vomited on the ground outside an apartment complex as he was bundled into an ambulance. In addition, CBS is reporting one possible Ebola patient in isolation in Hawaii. Contained? Perhaps it is time to rethink the ethics of disease control once again.

 

After being sent home by a Dallas hospital,

The Dallas patient had initially sought treatment at Texas Health Presbyterian Hospital late last Thursday and was sent home with antibiotics rather than being observed further, even though he told a nurse he had recently returned from West Africa. By Sunday, he needed an ambulance to return to the same hospital, where he was admitted.

 

A nurse asked about the travel as part of a triage checklist and was told about it. “Regretfully, that information was not fully communicated throughout the full teams. As a result, the full import of that information wasn’t factored into the full decision making,” Texas hospital official Mark Lester said.

Duncan rapidly fell ill…

Two days after he was sent home from a Dallas hospital, the man who is the first person to be diagnosed with Ebola in the United States was seen vomiting on the ground outside an apartment complex as he was bundled into an ambulance.

 

“His whole family was screaming. He got outside and he was throwing up all over the place,” resident Mesud Osmanovic, 21, said on Wednesday, describing the chaotic scene before the man was admitted to Texas Health Presbyterian Hospital on Sunday where he is in serious condition.

Duncan’s family took action…

That was the day “I called CDC to get some actions taken, because I was concerned for his life and he wasn’t getting the appropriate care,” Duncan’s nephew, Josephus Weeks, told NBC News on Wednesday night. “I feared other people might also get infected if he wasn’t taken care of, and so I called them to ask them why is it a patient that might be suspected of this disease was not getting appropriate care?”

 

Weeks added that he hoped “nobody else got infected because of a mistake that was made.”

Which has led to…

NBC has confirmed with the Dallas county health and human services that 80 people came into contact with the Dallas Ebola patient or his family.

 

Director Zachary Thompson said these 80 people were not in close contact, but they did have some kind of contact with or exposure to the patient.

 

Separately, Texas health officials have ordered four family members who had contact with the Dallas Ebola patient to stay home and not have visitors to prevent the potential spread of disease.

 

The order, hand delivered to Thomas Eric Duncan’s relatives Wednesday night by Texas Department of Health Services officials, legally requires the family to comply until at least Oct. 19, when the incubation period has passed and the family is no longer at risk of having the disease.

And then there is this….

Doctors are keeping one possible Ebola patient in isolation in Hawaii, but symptoms could reflect many illnesses.

— CBS This Morning (@CBSThisMorning) October 2, 2014

* * *

As we noted previously, it is perhaps time to discuss the ethics of disease control a little more broadly before the totalitarian weight of government comes to bear.

via Zero Hedge http://ift.tt/1oDXbyP Tyler Durden

Two months ago, we warned that Deutsche Bank “raised the warning flag“, when its strategist Jim Reid, referring to the infamous chart showing the correlation of the Fed’s balance sheet and the S&P 500 said:

The risk sell-off we’ve seen in recent weeks frustrates us a little as the chart we’ve published most this year has pretty much predicted that tougher times would come around July. We’ve been paying it a lot of attention for over a year now but decided to wait until the autumn before we raised the warning flags. The chart in question (included in today’s pdf) is the one showing the Fed balance sheet and the S&P 500 (as a proxy for risk generally). As you can see, since the Fed balance sheet was used as an aggressive policy tool post-GFC, the graph suggests that the S&P 500 is well correlated with the size of the Fed balance sheet with the former leading the latter by 3 months. Given that the Fed have recently signalled that they will likely be finishing expanding their balance sheet in October, 3 months before that was July. This is important as virtually all of the mega rally in the last 5 years has come in the Fed balance sheet expansion periods. The other periods have been more challenging for markets.

The chart he is referring to, of course, is this one.

 

And judging by the recent bout of volatility and risk weakness, we are now entering one of the “infamous” other periods.

So as it is finally dawning on even the most die-hard, and naive, pundits that it was all about the Fed for the past 6 years, here is Jim Reid’s latest comment on this infamous “pair trade”:

With the recent weakness in risk, are we understanding more about how addicted markets have been to the Fed’s QE? Or is this just a temporary unrelated blip? The Fed will turn off the QE tap later this month and in our opinion volatility has been increasing as the market adjusts. We’ve long felt that the Fed pulling back from QE would be an issue for markets and it’s tempting to be bearish here. 

That said, it is only stocks that are set for more weakness. As Reid notes, “credit markets have corrected a long way already”, as we have shown repeatedly.

In fact, we will show it again, to show just how much further stocks have to plunge because, as always, credit is right and stocks are wrong.

via Zero Hedge http://ift.tt/1xFyvhE Tyler Durden

Two months ago, we warned that Deutsche Bank “raised the warning flag“, when its strategist Jim Reid, referring to the infamous chart showing the correlation of the Fed’s balance sheet and the S&P 500 said:

The risk sell-off we’ve seen in recent weeks frustrates us a little as the chart we’ve published most this year has pretty much predicted that tougher times would come around July. We’ve been paying it a lot of attention for over a year now but decided to wait until the autumn before we raised the warning flags. The chart in question (included in today’s pdf) is the one showing the Fed balance sheet and the S&P 500 (as a proxy for risk generally). As you can see, since the Fed balance sheet was used as an aggressive policy tool post-GFC, the graph suggests that the S&P 500 is well correlated with the size of the Fed balance sheet with the former leading the latter by 3 months. Given that the Fed have recently signalled that they will likely be finishing expanding their balance sheet in October, 3 months before that was July. This is important as virtually all of the mega rally in the last 5 years has come in the Fed balance sheet expansion periods. The other periods have been more challenging for markets.

The chart he is referring to, of course, is this one.

 

And judging by the recent bout of volatility and risk weakness, we are now entering one of the “infamous” other periods.

So as it is finally dawning on even the most die-hard, and naive, pundits that it was all about the Fed for the past 6 years, here is Jim Reid’s latest comment on this infamous “pair trade”:

With the recent weakness in risk, are we understanding more about how addicted markets have been to the Fed’s QE? Or is this just a temporary unrelated blip? The Fed will turn off the QE tap later this month and in our opinion volatility has been increasing as the market adjusts. We’ve long felt that the Fed pulling back from QE would be an issue for markets and it’s tempting to be bearish here. 

That said, it is only stocks that are set for more weakness. As Reid notes, “credit markets have corrected a long way already”, as we have shown repeatedly.

In fact, we will show it again, to show just how much further stocks have to plunge because, as always, credit is right and stocks are wrong.

via Zero Hedge http://ift.tt/1xFyvhE Tyler Durden

Unlike last month, when in an act of futility and desperation, the ECB pushed NIRP into NIRPer territory, this time the ex-Goldmanite in charge of Europe’s money printer decided not to antagonize Germany further, and to do nothing.

From the ECB:

At today’s meeting, which was held in Naples, the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.05%, 0.30% and -0.20% respectively.

 

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 2.30 p.m. CET today.

And now, attention shifts to Draghi’s press conference in 45 minutes in which he is expected to explain i) how he will increase the ECB’s balance sheet by €1 trillion when there is only €500 billion in evailable ABS to monetize and ii) how much Greek junk bonds he needs to buy for Europe to emerge from its triple-dip recession, which it has by now certainly entered.

via Zero Hedge http://ift.tt/1E439mt Tyler Durden

• As we warned in May 2013… Gross Exposes $42 Trillion Bond Market’s Key Flaw in Exit (BBG)…. hint: no liquidity
• WTI Crude Slips Below $90 for First Time in 17 Months (BBG)
• Traders Thank Fed for Once-in-Decade Surge in Profit (BBG)
• Islamic State committing ‘staggering’ crimes in Iraq: U.N. report (Reuters)
• Philippine Islamist militants threaten to behead German on October 17 (Reuters)
• Draghi’s Buying Spree for the ECB Might Start Modestly (BBG)
• Russian Officials Say No Plans for Capital Controls (WSJ)
• Indians Join the Wave of Investors in Condos and Homes in the U.S. (NYT)
• Leader of Mexican drugs cartel captured (FT)
• Dallas Ebola patient vomited outside apartment on way to hospital (Reuters)
• Goldman chat room a message to Wall St (FT)
• Angry former workers: Angry Birds Maker Rovio to Cut up to 130 Jobs in Finland (WSJ)
• Steven Cohen Urges Court to Dismiss Ex-Wife’s Fraud Suit (BBG)
• As PIMCO bleeds assets, Gross shows risk of star culture (Reuters)
• Caltech Leads World University Rankings for Fourth Year (BBG)
• U.S. Apartment Vacancies Rise for First Time Since 2009 (BBG)
• Commodity ETF Outflows Reach Highest This Year on Supply (BBG)
• China backs Hong Kong leader CY Leung over tear gas (FT)

 

Overnight Media Digest

WSJ

* Secret Service Director Julia Pierson resigned after coming under intense pressure following an embarrassing breach of security at the White House two weeks ago. (http://on.wsj.com/10m0Iwa)

* Health authorities are monitoring for symptoms of Ebola in at least a dozen people who came into contact with a Liberian man before he was hospitalized in Dallas, a move to prevent the virus’s spread in the U.S. (http://on.wsj.com/1rGPsmT)

* American consumers are buying new cars and trucks at the strongest pace in years, offsetting car makers’ troubles elsewhere and leading the biggest U.S. auto maker to forecast fat profits ahead. (http://on.wsj.com/1sO9y28)

* The Coca-Cola Co, bowing to pressure from lead investor Warren Buffett, announced changes to its executive pay plan that will result in fewer stock awards. (http://on.wsj.com/1E2LU4W)

* Pacific Investment Management said investors pulled $23.5 billion from the Pimco Total Return fund in September, the firm’s largest-ever monthly outflow, with the largest amount on the day founder Bill Gross abruptly quit. (http://on.wsj.com/1sOcig7)

* Bank of America Corp’s board voted to make Brian Moynihan chairman as well as chief executive, capping a comeback for a banker who survived the regulatory scrutiny and huge losses that followed the financial crisis. (http://on.wsj.com/1rGPsn5)

 

FT

* Some of the world’s largest banks have stopped contributing to many of the financial benchmarks to avoid potential litigation, as a result of the Libor and foreign exchange rate rigging scandal.

* German ecommerce company Rocket Internet AG priced its shares at 42.50 euros ($53.6265). The share listing is expected to raise gross proceeds of 1.4 billion euros and give it a market value of 6.7 billion euros.

* France and Italy have increased their defiance of EU budget targets as the two countries go into talks relating to their public finances with their European partners in the coming weeks.

* UK Prime Minster David Cameron vowed to lower income taxes for 30 million people and keep a competitive corporate tax policy. These tax cuts will cost 7.2 billion pounds a year when fully implemented in 2020.

* Google Inc announced it would stop publishing snippets of German publisher Axel Springer’s articles in its search results. This action follows a dispute between both the groups over intellectual property rights. (1 US dollar = 0.7925 euro)

 

NYT

* Pimco’s flagship fund, once billed as the world’s biggest bond fund, is shrinking fast. In September, investors pulled $23.5 billion from the Pimco Total Return Fund, with the largest redemptions coming on Sept. 26, the day Bill Gross stunned Wall Street by resigning from the firm he co-founded more than 40 years ago. (http://nyti.ms/1rNUmjx)

* Coca-Cola Co, facing sharp shareholder criticism of its executive pay, on Wednesday announced changes to the compensation plan that set off the squall. (http://nyti.ms/10lZYXP)

* Federal and state authorities, a group that includes prosecutors in New York, Alabama and Texas, are zeroing in on the most powerful, and arguably the least regulated, rung of the subprime auto loan chain, used-car dealerships, according to people briefed on the investigations. Already, they have found hundreds of fraudulent loans that together total millions of dollars. (http://nyti.ms/1vz65mf)

* A federal bankruptcy judge on Wednesday upended the widely held belief that public workers’ pensions have a special status in California that makes them impossible to cut, further chipping away at the idea that pensions are sacrosanct in a municipal bankruptcy. (http://nyti.ms/1uf22vX)

* David Neil, senior Justice Department Prosecutor said he planned to depart the government at the end of the week, capping an eight-year Justice Department career. (http://nyti.ms/1ps2MIG)

* The proxy advisory firm Institutional Shareholder Services amplified calls for Allergan Inc’s board to hold off from making an all-cash acquisition that would scuttle an existing takeover offer from Valeant Pharmaceuticals International Inc and Pershing Square Capital Management. (http://nyti.ms/1oAB502)

* Bank of America Corp said on Wednesday that Brian Moynihan, its chief executive, would assume the additional role of chairman. (http://nyti.ms/1oCs5HM)

* Relational Investors, one of the most prominent activist investors, is planning to start a new fund that will give more day-to-day control to the firm’s younger executives, a person briefed on the matter said on Wednesday. (http://nyti.ms/1rxuRDT)

* The German technology company Rocket Internet priced its initial public offering at the top of its price range at 42.5 euros ($53.8) a share on Wednesday, val
uing the company at 6.7 billion euros, or roughly $8.4 billion. (http://nyti.ms/1tj1QYh)

 

Canada

THE GLOBE AND MAIL

** A federal cyberbullying bill, C-13, that includes controversial new surveillance powers – and immunity for telecommunications companies that voluntarily hand over private data to police – has taken another step toward becoming law, despite a recent Supreme Court ruling that critics say is at odds with the bill. (http://bit.ly/1r0pYND)

** Canada’s largest school board is joining a handful of other academic institutions in taking steps to sever its ties to a language and culture program controlled by the Chinese government. A Toronto District School Board committee voted on Wednesday evening to terminate the Confucius Institute. All but one member on the planning and priorities committee voted in favour of terminating the accord. (http://bit.ly/1vzP5wd)

** Tough new federal anti-corruption rules risk disqualifying several key government suppliers, jeopardizing government plans to buy items ranging from ships and fighter jets to computer systems. At least five foreign multinationals – BAE Systems PLC, Siemens AG, Alcatel-Lucent SA, Tyco International Inc and Hewlett-Packard Co have been convicted of crimes overseas and consequently face possible 10-year bans from doing business with Ottawa. (http://bit.ly/1mU12w3)

NATIONAL POST

** The Stephen Harper government plans further changes to its oft-maligned veterans charter, hoping to take the political sting out of complaints by ex-soldiers promising to campaign against them in the next election. (http://bit.ly/1psCwOk)

** As the debate over the Scarborough subway rages in the Toronto mayoral race, Ontario’s transportation minister was forced on Wednesday to clarify again that the Liberal government is “moving forward” with the transit project, after the finance minister refused to commit to such a position. (http://bit.ly/1tjwmkL)

** The Bank of Canada will be forced to renew warnings of the possibility for higher interest rates in order to halt a “bubble” from forming in the housing market, according to Pacific Investment Management Co Managing Director Ed Devlin. (http://bit.ly/1thjewB)

 

Corporate Finance

* Colombian Natural Resources, owned by investment bank Goldman Sachs Group Inc, will re-start coal exports and re-establish mining operations after the government helped broker a deal for its use of Drummond’s Caribbean Sea port, according to government and industry sources.

* China Investment Corp and AVIC Capital Co Ltd have ended talks to acquire Avolon Holdings Ltd (IPO-AVOL.N), making it likely that the aircraft leasing company will pursue an initial public offering, according to people familiar with the matter.

* Amazon.com Inc’s India unit plans to sell packaged food and beverages, starting mid-October, according to a person with direct knowledge of the launch. (bit.ly/1BAIAtJ)

* Hochtief AG, the German building group controlled by Spain’s ACS, is close to the sale of its Formart real estate business, two sources familiar with the matter told Reuters on Wednesday.

 

 

Fly On The Wall Pre-market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Jobless claims for week of September 27 at 8:30–consensus 297K
Factory orders for August at 10:00–consensus down 9.3%

ANALYST RESEARCH

Upgrades

Autodesk (ADSK) upgraded to Neutral from Sell at Citigroup
Autodesk (ADSK) upgraded to Outperform from Market Perform at Cowen
Autodesk (ADSK) upgraded to Outperform from Neutral at Credit Suisse
Bank of America (BAC) upgraded to Buy from Neutral at UBS
Barrick Gold (ABX) upgraded to Hold from Sell at Canaccord
Electronics for Imaging (EFII) upgraded to Buy from Neutral at Citigroup
Encana (ECA) upgraded to Buy from Hold at Deutsche Bank
Equity One (EQY) upgraded to Neutral from Sell at Citigroup
Fossil (FOSL) upgraded to Buy from Hold at ISI Group
Gentex (GNTX) upgraded to Outperform from Market Perform at Wells Fargo
IntercontinentalExchange (ICE) upgraded to Buy from Hold at Deutsche Bank
Kinder Morgan (KMI) upgraded to Outperform from Market Perform at Wells Fargo
Mattel (MAT) upgraded to Market Perform from Underperform at BMO Capital
NASDAQ (NDAQ) upgraded to Buy from Hold at Deutsche Bank
Pandora (P) upgraded to Buy from Hold at Topeka
Preferred Bank (PFBC) upgraded to Outperform from Market Perform at Raymond James
PulteGroup (PHM) upgraded to Neutral from Sell at Goldman
Time Warner (TWX) upgraded to Hold from Sell at Topeka
Twitter (TWTR) upgraded to Overweight from Neutral at JPMorgan

Downgrades

A10 Networks (ATEN) downgraded to Neutral from Buy at Citigroup
Enphase Energy (ENPH) downgraded to Neutral from Buy at BofA/Merrill
Francesca’s (FRAN) downgraded to Hold from Buy at Canaccord
Intuit (INTU) downgraded to Underweight from Equal-Weight at Evercore
JPMorgan (JPM) downgraded to Neutral from Buy at UBS
Motorola Solutions (MSI) downgraded to Neutral from Buy at Citigroup
NVR (NVR) downgraded to Sell from Neutral at Goldman
ONEOK (OKE) downgraded to Neutral from Overweight at JPMorgan
PNC Financial (PNC) downgraded to Hold from Buy at Jefferies
Tower International (TOWR) downgraded to Market Perform from Outperform at Wells Fargo
U.S. Steel (X) downgraded to Hold from Buy at KeyBanc
WebMD (WBMD) downgraded to Hold from Buy at Stifel

Initiations

Delek US (DK) initiated with an Outperform at RBC Capital
Hanesbrands (HBI) initiated with an Outperform at Credit Suisse
HollyFrontier (HFC) initiated with a Sector Perform at RBC Capital
Insys Therapeutics (INSY) initiated with an Outperform at RBC Capital
Madison Square Garden (MSG) initiated with a Neutral at JPMorgan
Marathon Patent Group (MARA) initiated with a Buy at Ladenburg
Marathon Petroleum (MPC) initiated with a Top Pick at RBC Capital
Patent Properties (PPRO) initiated with a Buy at Ladenburg
Phillips 66 (PSX) initiated with a Sector Perform at RBC Capital
Ply Gem (PGEM) reinstated with a Neutral at Credit Suisse
Rightside Group (NAME) initiated with a Buy at B. Riley
Rubicon Project (RUBI) initiated with a Buy at B. Riley
Salesforce.com (CRM) initiated with a Neutral at DA Davidson
Splunk (SPLK) initiated with a Buy at Stifel
Stillwater Mining (SWC) initiated with a Neutral at Goldman
Tesoro (TSO) initiated with an Outperform at RBC Capital
Valero (VLO) initiated with an Outperform at RBC Capital
Varonis (VRNS) initiated with an Outperform at JMP Securities

COMPANY NEWS

BofA (BAC) CEO Moynihan elected Chairman of the Board of Directors
Starboard Value raises stake in RealD (RLD) to 9.9% from 9.1%, proposes $12 buyout
NFL, DirecTV (DTV) extend NFL Sunday Ticket in new multi-year deal
Arotech (ARTX) CEO Robert S. Ehrlich steps down replaced by Steven Esses
Dollar General (DG) extends tender offer to acquire Family Dollar to Oct. 31
EMC (EMC) names Zane Rowe CFO
Liquidity Services (LQDT) announces business realignment, new senior leadership
Netflix (NFLX) signs deal deal with Adam Sandler for four feature films
NewLink Genetics (NLNK) terminates CFO Gordon Link
Qihoo 360 (QIHU) announces $200M shar
e repurchase plan
Tesla (TSLA) CEO says time to ‘unveil D, something else’

EARNINGS
Companies that beat consensus earnings expectations last night and today include:
Global Payments (GPN), McCormick (MKC), National American University (NAUH)

Companies that missed consensus earnings expectations include:
Park Electrochemical (PKE)

Global Payments (GPN) ups FY15 cash EPS view to $4.65-$4.75, consensus $4.60
Darden (DRI) sees Q2 EPS in upper end of 26c-28c, consensus 26c
McCormick (MKC) raises FY14 adjusted EPS view to $3.30-$3.37, consensus $3.28
Agrium (AGU) sees Q3 EPS 45c-55c, consensus 68c
PTC Inc. (PTC) sees Q4 revenue at or above high end of $340M-$355M, consensus $349.03M

NEWSPAPERS/WEBSITES

Masimo (MASI) wins $466M verdict in patent suit with Philips, Bloomberg says 
Royal Bank of Canada (RY) prop desk spin-off plan shot down by regulators, WSJ says
Scripps Networks (SNI) reaches licensing deal with Netflix, WSJ reports
Verizon (VZ) withdraws target to throttle unlimited LTE data plans, Gigaom says
Vivendi looking for acquisitions in U.S. media space, NY Post reports

SYNDICATE

AAC Holdings (AAC) 5M share IPO priced at $15.00
Atento (ATTO) 10M share IPO priced at $15.00
Calithera Biosciences (CALA) 8M share IPO priced at $10.00
Digital Ally (dgly) files to sell 1.19M shares for holders
JP Energy (JPEP) 13.75M share IPO priced at $20.00
Memorial Resource (MRD) files to sell 27.8M shares for holders
Portola Pharmaceuticals (PTLA) files to sell 10M shares
Radius Health (RDUS) files to sell common stock
VWR Corp (VWR) 25.532M share IPO priced at $21.00
Wayfair (W) 11M share IPO priced at $29.00

via Zero Hedge http://ift.tt/1x2gg2K Tyler Durden

Following yesterday’s acorss the board US stock market drubbing, equity futures are mostly unchanged awaiting today’s key event which is the ECB’s latest announcement in just over an hour and Draghi press conference 45 minutes later, both of which however are expected to be far more muted than last month’s bombastic announcement (which has already led to new European cracks with Germany throwing up all over Draghi’s proposal to buy Greek junk). Additionally there is initial claims and factory orders data, which however will hardly do much to change the recent sharp plunge in global economic momentum as Goldman showed yesterday.

So while equities are hugging the flatline, a bigger story was the overnight crash in the Nikkei225 and the Topix both of which plunged at the fast pace in months, with the Yen spiking, pushing the USDJPY as low as 108.35 after Japan’s Vice Finance Minister, Nobuhide Minorikawa, earlier today told reporters that no further increases in the USDJPY wil be tolerated saying  that “there are companies negatively affected by the weak yen.” In other words, as we have been saying since December of 2012.

But the biggest market development overnight is the plunge in crude, with both Brent and WTI plunging, the latter sliding under $90 for the first time in 17 months, extending yesterday’s selloff after Saudi Aramco cut Arab Light OSP in Asia to 2008 levels. Brent drops to lowest since June 2012. This also confirms that the global slowdown whose can is kicked every so often in a new bout of money printing, is arriving fast. That, and the imminent crackdown on today’s Hong Kong protest will likely be the biggest stories of the day, even as the spread of Ebola to the US is sure to keep everhone on edge.

European equities traded in the red from the get-go at the cash open with the fallout of the US sell-off and declines in Asia weighing on investor sentiment. For anyone interested, an explanation detailing yesterday’s sharp declines can be viewed here. On a sector specific basis, energy names underpeform following the extension of the move lower in the energy complex with WTI dipping below USD 90/bbl. Of note for luxury names, LVMH trade higher by 1.2% after being raised at JP Morgan which is subsequently lifting the consumer discretionary sector.

Looking at the day ahead, the main item on the European agenda is the ECB meeting. Beyond that we will also get the September change in Spanish unemployment, the UK construction PMI (expected in at 63.5) and the euro area August PPI (expected in at -0.1% MoM). In the US we will get initial jobless claims (expected at 297k) and the August factory orders (expected at -9.5%).

US Event Calendar

• 7:30am: Challenger Job Cuts y/y, Sept. (prior -20.7%)
• 7:30am: RBC Consumer Outlook Index, Oct. (prior 52.4)
• 8:30am: Initial Jobless Claims, Sept. 27, est. 297k (prior 293k), Continuing Claims, Sept. 20, est. 2.425m (prior 2.439m)
• 9:45am:  ISM New York, Sept. (prior 57.1)
• 9:45am:  Bloomberg Consumer Comfort, Sept. 28 (prior 35.5)
• 10:00am: Factory Orders, Aug., est. -9.5% (prior 10.5%)

Bulletin Headline Summary from RanSquawk and Bloomberg

• European equities follow on from their US and Asian counterparts after US equities reached their lowest levels since mid-August and the Nikkei 225 saw it sharpest fall since Aug. 8th.
• Energy names underperform in Europe after WTI crude futures broke below USD 90/bbl for the first time in 17 months.
• The USD-index trades with losses of around 0.3% which has subsequently boosted commodity currencies and seen USD/JPY break back below 109.00.
• Looking ahead, attention turns towards today’s ECB policy announcement where the ECB are unlikely to commit to further tools until after embarking on the newest policy – ABS and Covered Bond purchases.

ASIA

JGBs traded up 1 tick at 145.89 after paring earlier gains seen amid spill-over buying from yesterday’s rally across global fixed income markets, weighed on by today’s disappointing 10yr JGB auction. Asian equities traded lower across the board in tandem with the sharp sell-off in stocks markets across both sides of the Atlantic yesterday. The Nikkei traded down 2.6% in what was the largest decline in the index since Aug. 8th. As a reminder, mainland China and Hong Kong markets are closed today for National Day Holiday with Chinese bourses set to reopen next Wednesday and Hong Kong markets resuming on Friday.

FIXED INCOME

Fixed income markets have seen a relatively tentative session so far as participants await the ECB rate decision with Eurozone supply initially capping any potential upside alongside the softness in equities. In terms of this morning issuance, Spain saw a relatively inline auction of their modest 2020 and 2024 bonds, with record-low yields as has been the case in previous auctions. In terms of the French issuance, all three lines saw lower yields, with fixed income markets following suit with the moves in equity markets when both Spanish and French supply had been absorbed.

EQUITIES

European equities traded in the red from the get-go at the cash open with the fallout of the US sell-off and declines in Asia weighing on investor sentiment. For anyone interested, an explanation detailing yesterday’s sharp declines can be viewed here. On a sector specific basis, energy names underpeform following the extension of the move lower in the energy complex with WTI dipping below USD 90/bbl. Of note for luxury names, LVMH trade higher by 1.2% after being raised at JP Morgan which is subsequently lifting the consumer discretionary sector.

FX

Overnight, the USD-index extended on yesterday’s losses consequently supporting major USD pairs with commodity-linked currencies being the main beneficiaries. USD/CAD briefly broke below the 1.1100 handle to print a fresh weekly low while NZD/USD recovered all of Tuesday’s RBNZ FX intervention-inspired declines. AUD also strengthened further after AU building approvals surged to a 3-month high (3.0% vs. Exp. 1.0%) prompting AUD/USD to break above the 0.8800 handle. In terms of the European session, FX markets have traded in a largely rangebound manner with the USD-index continuing to dictate the state of play and GBP/USD pulling away from its highs after the beat on UK construction PMI (64.2 vs. Exp. 63.5).

* * *

DB’s Jim Reid concludes the overnight recap

In European equity markets the Euro Stoxx, FTSE 100 and DAX lost -1% whilst the CAC and FTSE MIB dropped -1.2% and -0.9% respectively. Over in the US the S&P500 and NASDAQ closed down -1.3% and -1.6% respectively. In credit markets, European iTraxx Main and US CDX IG widened +0.6bps and +0.3bps respectively, whilst European iTraxx Xover widened only +1bps and US CDX HY was unchanged. European financial CDS indices actually ended the day tighter. The big performers yesterday were government bond markets as the US, German and UK 10Yr fell -8bps, -5bps and -7bps respectively.

There were a few stories impacting markets yesterday. We had the after effects of the first reported Ebola case in the US which caused nervousness, especially in some travel and freight stocks. We also had lots of noise about the Russell 2000 now being 10% off its recent highs. Elsewhere we saw an increase in Russia-Ukraine worries after stories from Ukraine that a shell had killed four people at a school in the rebel-held east (BBC) in what remains a shaky ceasefire with continued flare-ups. The EU is set to keep sanctions against Russia in place as they have deemed the peace deal to not be full effective (BBC). Also we had weaker data on both sides of the pond. On this, whilst ADP US employ
ment growth came in marginally ahead of expectation (+213k vs +205k expected), manufacturing PMI (57.5 vs 57.9 expected), manufacturing ISM (56.6 vs 58.5 expected) and construction spending (-0.8% MoM vs +0.5% MoM expected) all disappointed.

In Europe, although Italian manufacturing PMI’s beat expectation at 50.7 (vs 49.5 expected) and the Spanish and French reads came in-line at 52.6 and 48.8 respectively, the German activity dropped to 49.9 (vs 50.3 expected) which brought the broader eurozone number below expectations at 50.3 (vs 50.5 expected). As DB European Economist Peter Sidorov wrote yesterday on the releases, ‚It is worth noting that the ‘periphery’ is now outperforming the ‘core’ euro countries in the manufacturing PMIs, which could help to partially offset its greater vulnerability on the domestic front. A reduction in fragmentation across countries should also make agreeing on common policy measures easier in the euro area, including the ECB’s easing and the European investment initiative proposals currently under discussion.?  Although the market isn’t expecting any new policy action from the ECB today, asset purchases are set to start this month and the technical details of the ECB’s purchase programmes are set to be announced. More importantly any changes in ECB rhetoric will be closely watched as pressure has continued to build on the ECB to bring in full public QE. There will no doubt be questions about whether government bond purchases will be used if the ECB can’t increase their balance sheet by the trillion Euros that Draghi has made a policy aspiration.

In overnight news, Hong Kong’s pro-democracy student protestors have threatened to besiege government offices unless their demands for the resignation of the head of the HK government by Thursday night are met as protests have continued during China’s National Day holiday. This came as China’s Foreign Minister has described the protests as ‚illegal? (BBC). Looking at how markets have reacted overnight they seem largely to be mirroring yesterday’s European and US moves. As we write the Nikkei is down -2% whilst the MSCI Asia Pacific index had been down -0.6% before rallying back slightly to now sit around -0.2%. In credit the iTraxx Asia is wider by around +2bps whilst Japan and Australia’s 10Y government bonds have rallied -0.4bp and -7bps respectively.

Looking at the day ahead, the main item on the European agenda is the ECB meeting. Beyond that we will also get the September change in Spanish unemployment, the UK construction PMI (expected in at 63.5) and the euro area August PPI (expected in at -0.1% MoM). In the US we will get initial jobless claims (expected at 297k) and the August factory orders (expected at -9.5%).

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