Russia started bombing jihadi bases in Syria today.

Given that the the U.S. and its allies are largely responsible for creating ISIS, and that U.S., Turkey and Israel have all been acting as ISIS’ air force – they are not taking too kindly to Russia’s actions.

This Wall Street Journal headline sums up the absurdity of the situation:  “Russian Airstrike in Syria Targeted CIA-Backed Rebels, U.S. Officials Say.”

We noted years ago that a proxy war is raging in Syria … but things are getting even more over-heated.

Political risk expert Ian Bremmer sums up the situation:

Russian forces will be striking Assad enemies, some of whom are directly supported by the US and its allies. That’s not a proxy war. It’s one step closer.

What could possibly go wrong?

First published here: http://www.zerohedge.com/news/2015-10-01/syria-%E2%80%9Cnot-proxy-war-it%E2%80%99s-one-step-closer%E2%80%9D

First published here: http://www.zerohedge.com/news/2015-10-01/one-pain-isis

Follow The Market Madness with Voice and Text on FinancialJuice

EMOTION MOVING MARKETS NOW: 24/100 EXTREME FEAR

PREVIOUS CLOSE: 12/100 EXTREME FEAR

ONE WEEK AGO: 31/100 FEAR

ONE MONTH AGO: 14/100 EXTREME FEAR

ONE YEAR AGO: 12/100 EXTREME FEAR 

Put and Call Options: EXTREME FEAR During the last five trading days, volume in put options has lagged volume in call options by 14.57% 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 24.50. This is a neutral reading and indicates that market risks appear low.

Stock Price Strength: FEAR The number of stocks hitting 52-week lows exceeds the number hitting highs and is at the lower end of its range, indicating 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) | 10 YR T NOTE | 2 YR T  NOTE | 5 YR T NOTE | 30 YR TREASURY BOND| SOYBEANS | CORN

 

MEME OF THE DAY – BEIJING AFTER VOLKSWAGEN

 

UNUSUAL ACTIVITY

APPS Director purchase 127K @ 1.57

JOY Director purchase 12,200  A  $ 14.77  , 4,346  A  $ 14.8 , 2,854  A  $ 14.81  , 2,265  A  $ 14.82 , 2,435  A  $ 14.83

Z NOV 30 Puts @ 4.70 on the offer 1600 contracts

MU Jan 5 Put Activity @ 0.18 on the offer

BDSI NOV 6 Calls on the offer @ 0.80 1800+

More Unusual Activity…

HEADLINES

 

Senate passes bill that would keep government open

IMF's Lagarde: Global growth likely weak this year

Fed's Dudley: Will make sure QE withdrawal won't roil markets

S&P sees ECB doubling QE

China Reports First Official FX Reserve Data to IMF

US DOE US Crude Inventory (WoW) Sep-25: 3955K

EIA: US Crude Oil Production Rose 94,000bpd In July

China's gold reserves rise to 54.45m fine troy oz

US Corn, Soybean Prices Drop as Domestic Stockpiles Rise

Jack Dorsey to Be Named Permanent Twitter CEO

China Premier Li: Economy Remains In Reasonable Range

Russia launches air strikes in Syria

 

GOVERNMENTS/CENTRAL BANKS

Senate passes bill that would keep government open --~MW

IMF's Lagarde: Global growth likely weak this year, modest acceleration in 2016 --CNBC

IMF cuts Australia growth projections for 2015 and 2016 to 2.4% and 2.9% respectively - IMF

Fed's Dudley: Will make sure QE withdrawal won't roil markets - ForexLive

Fed's Dudley: Open to adjusting bond market rules to improve liquidity - CNBC

ECB's Weidmann: EU should have clear rules for sovereign debt -- ForexLive

ECB's Hansson sees 'moderate' inflation in Eurozone - ForexLive

S&P sees ECB doubling QE - Rtrs

Brexit risk 'not priced in' Morgan Stanley warns - FT

BOJ announces October bond purchase programme - Forex Live

Japanese public pension fund likely saw July-September loss --Nikkei

Riksbank's Skingsley: Riksbank Has No Target For The Krona - BBG

FIXED INCOME

Treasury Investors See Quarterly Gains as Risk-Off Wagers Reign - BBG

Southern European bond yields fall as election risks fade - Rtrs

BoE's GBP1.41 Bln 7-15 Year Gilt Buy-Back Receives Offer/Cover Ratio Of 2.12 (Pre 2.36)

Glencore bonds still trade as junk despite bounce - FT

FX

USD: Dollar Strengthens Over Third Quarter - WSJ

USD: Dollar remains broadly higher - Investing.com

EUR: Euro lower as Eurozone falls back into deflation - Investing.com

GBP: Cable Steady at 5-Mth Low as Fed Leads Hike Race - WBP

JPY: Buck Dwells Around Break-Even - WBP

China Reports First Official FX Reserve Data to IMF - BBG

HKMA intervenes again to sell HK$ 12bln to maintain trading band --ForexLive

ENERGY/COMMODITIES

Brent oil up on Syria worry; U.S. crude down on supply build - Rtrs

Oil finishes the quarter with a 24% loss - MktWatch

Gold falls 1.5% on month, loses 4.8% on quarter - MktWatch

Copper Prices Surge on Supply Disruptions in Chile, Peru - WSJ

US DOE US Crude Inventory (WoW) Sep-25: 3955K (est. -250K, prev. -1925K)

US DOE US Distillate Inventory (WoW) Sep-25: -267K (est. -900K, prev. -2088K)

US DOE Cushing Inventory (WoW) Sep-25: -1068K (est. -350K, prev. -462K)

US DOE US Gasoline Inventory (WoW) Sep-25: 3254K (est. -750K, prev. 1369K)

EIA: US Crude Oil Production Rose 94,000bpd In July To 9.358mln bpd - FastFT

World Bank: Oil prices likely to stay volatile - FXstreet

China's gold reserves rise to 54.45m fine troy oz vs 53.93m prev - ForexLive

Steel prices sink to 11.5-year lows - FT

Australian Govt: Iron ore price has bottomed --ForexLive

US Corn, Soybean Prices Drop as Domestic Stockpiles Rise - WSJ

EQUITIES

U.S. Stocks Advance, Shaving Worst Quarterly Rout in Four Years - BBG

Torrid quarter ends with broad rebound for European stocks - FT

FTSE 100 rebounds as Sainsbury's lifts profit outlook - BBC

Carl Icahn says 'joyride' for stock market is over - MktWatch

AUTOS: Volkswagen may avoid environmental criminal charges - MktWatch

AUTOS: German prosecutors consider Audi probe - FT

M&A: Axel Springer purchases Thrillist Media Group stake - DL

M&A: Rio Tinto Agrees to Sell Coal Mine Stake for $606 Million --NYT

M&A: M&T Bank Gets Fed Nod to Buy Hudson City - WSJ

INDUSTRIALS: Airbus A320neo test aircraft suffers engine damage - MktWatch

TECH: Sources: Jack Dorsey to Be Named Permanent Twitter CEO - Re/Code

TECH: China's Tsinghua to buy Western Digital stake in U.S. tech push - Rtrs

TECH: Synaptics Said to Shun $110-a-Share Bid From China Investor - BBG

EMERGING MARKETS

China Premier Li: Economy Remains In Reasonable Range - CCTV

China Premier Li: Main Econ. Targets Can Be Achieved - CCTV

Russia launches air strikes in Syria - FT

World Bank Downgrades Russia's Economic Outlook - WSJ

RBI's Rajan says India is ready for a Fed rate hike sooner rather than later - Forex Live

 

Fitch: Emerging Market Vulnerability Weighing on Global Growth Outlook

First published here: http://www.zerohedge.com/news/2015-09-30/oct-1-feds-dudley-will-make-sure-qe-withdrawal-wont-roil-markets

Early in 2013, I did a laudatory review of the Tesla Model S (at which time, if I had any sense, I would have loaded up on the then-$40 stock), and I continue to believe it is the best car I've ever had. Around the same time, I put $5,000 down to reserve my spot for the Tesla X SUV. This product has been delayed for a long, long time, but Elon Musk promised it would start shipping in "Q3 2015". I cynically predicted he'd probably roll out one vehicle on September 30th, and I wasn't too far off: he rolled it out the day before. That is, last night.

I got an invitation to the event, which was held at the Tesla Factory. It's been many, many years since I've been to anything resembling a product intro, so I decided to go. I drove over the Dumbarton Bridge to Fremont, and I joined a fairly large crowd of other people who had also received invitations.

So we waited..........and waited...........and it got dark......

Then they finally let us in and, happily, there were unlimited free cocktails. I could get used to this!

And then, once again, we waited.........and waited..........and it was obvious that, as with the Model X, things were "delayed."

The event was supposed to start at 7;30, and it was getting close to 9. I was alone, but listening to other conversations, it was apparent to me people were running out of things to say to one another.

At long last, they let us into the room where the big event would be. At about 9 p.m., the loudspeaker announced "Mr. Elon Musk", and he strolled on stage. I've got to tell you, he's not the most fluid speaker on the planet, which surprised me. It seems I'm not the only one with this opinion.

He walked the audience through the car's safety features, its rapid acceleration, its automatically-opening doors, and the air control. He proudly stated that the air filtration was so good, measurement equipment literally could not detect any pollen, bacteria, or viruses inside the vehicle. It is literally as clean as a hospital operating room, and in "Bio Weapon Defense System" mode (yes, I'm serious), you could literally just hop in your car and survive a terrorist attack.

The lengthy delay for the speech was somewhat irksome (although the free drinks helped pass the time), but some luminaries were pretty peeved.

Here's a (not great quality) video I made for Musk demonstrating the car's gimmicky gull-wings when parked between two other vehicles.

There's no doubt that the Model X will be selling swiftly for a while, since there are already tens of thousands of people committed to doing so. The one and only topic Musk didn't mention in his presentation was price (and no one bothered asking, since I guess this was a solidly upper-middle-class-or-above crowd) but there's a finite number of people willing to spend six figures on a vehicle which, while spiffy, isn't exactly gorgeous aesthetically, and it isn't particularly large, either (I think the "SUV" moniker is stretching it a bit; it's more like a somewhat bloated Model S).

I think Tesla's product delays and high product prices are going to catch up with it, so I put on a small short position today. I'm looking forward to getting my X when it finally ships in a few months, but I don't think this is the game-changer that the Model S was in 2012.

First published here: http://www.zerohedge.com/news/2015-09-30/model-x-debut

FOMC members keep on repeating, like a mantra, that the Federal Reserve wants to hike interest rates still in 2015. Although the media is ‘hanging on the lips’ of the FOMC and U.S. Fed, it seems that the market has some other thoughts. Whatever happens in the ivory tower of central planners, rate hike or not, their mantra is going on for 5 full years now. No surprise that the market is transitioning in a state of disbelief.

One of the consequences of the rate hike hype was the crash of precious metals prices in 2013. The market truly overreacted, and sent gold, silver and miners into a truly epic bear market state.

Meantime, it seems that the precious metals complex is stabilizing. Given the growing disbelief in the interest rate hike, even precious metals bears are leaving the arena. As explained earlier this week, the number of bullish gold indicators is growing rapidly, suggesting a trend change is close.

The above observation is also reflected in the longer term precious metals charts. Recent price action is becoming more and more constructive with Gold (NYSE: GLD), Silver (NYSE: SLV) and Junior Gold Miners (NYSE: GDXJ) all pushing against their downtrend lines. Chart courtesy: Short Side Of Long.

The above chart shows that a HUGE breakout is now becoming a real possibility, and that gold traders seem to be anticipating (or speculating) that FOMC won’t rise rates in 2015, as noted by Short Side Of Long. Furthermore, if the stock market and economy weakens, more and more of the commentary could turn towards dovish views of more QE easing. One thing is for sure, hedge funds and other speculators are definitely underinvested towards this sector, as evidenced by the following chart. A strong contrarian signal !

Source: shortsideoflong.com

First published here: http://goldsilverworlds.com/price/gold-and-silver-about-to-make-a-huge-breakout/

Filed under: Market News, China, Federal Reserve, Biotechnology, Stocks

By Sinead Carew

NEW YORK -- U.S. stocks closed sharply higher Wednesday as investors sought bargains among beaten-down stocks and the recently battered biotechnology index bounced back on the last day of Wall Street's worst quarter since 2011.

For much of the third quarter, global markets were rocked by fears of slowing growth in China and uncertainty over timing for a U.S. Federal Reserve hike of interest rates. Biotech had a seven-day sell-off kicked off by drug price regulation worries.

"I don't think there was a specific piece of news driving the market today. We got very oversold," said Brian Fenske, head of sales trading at ITG in New York. "When everybody gets bearish quickly, you tend to get these bounces."

Investment strategists and traders said it was too soon to expect Wednesday's rally to be sustainable. However, instead of trying to bet on the rate hike timing, Fenske said that investors will now focus on economic data and look ahead to the third-quarter earnings season, which begins next week.

The Dow Jones industrial average (^DJI) rose 235.57 points, or 1.5 percent, to 16,284.7, the Standard & Poor's 500 index (^GSPC) gained 35.94 points, or 1.9 percent, to 1,920.03, and the Nasdaq composite (^IXIC) added 102.84 points, or 2.3 percent, to 4,620.17.

For the quarter, the Dow fell 7.6 percent, the S&P lost 6.9 percent and Nasdaq fell 7.4 percent. For September, the Dow fell 1.5 percent while the S&P dropped 2.6 percent and Nasdaq fell 3.3 percent.

Trading was heavy Wednesday with 8.52 billion shares changing hands on U.S. exchanges, above the 7.28 billion average for the previous 20 sessions, according to Thomson Reuters (TRI) data.

Economic Concerns

The Fed has said it needs to see more improvement in the labor market and be confident that inflation will increase before raising rates for the first time since 2006. Inflation remains below the Fed's 2 percent target.

Yellen said last week the central bank remained on track to raise rates this year. The Fed meets next on Oct. 27-28.

Data released Wednesday showed the U.S. private sector added more jobs than expected in September, raising hopes for a strong reading in the government's payrolls report due Friday.

All 10 S&P sectors were higher, with the consumer discretionary index's 2.7 percent rise leading the gains. The Nasdaq biotechnology index closed up 4.5 percent as investors sought bargains in the sector, but was still down 11.5 percent for the month after Democratic presidential candidate Hillary Clinton criticized drug pricing last week.

Although the market's recent rout has forced many strategists to slash expectations, a Reuters poll showed the S&P 500 is expected to end 2015 roughly 11 percent above current levels.

Advancing issues outnumbered declining ones on the NYSE by 2,340 to 758, for a 3.09-to-1 ratio; on the Nasdaq, 2,063 issues rose and 783 fell for a 2.63-to-1 ratio favoring advancers. The S&P 500 posted 3 new 52-week highs and 18 new lows; the Nasdaq recorded 22 new highs and 179 new lows.

-Abhiram Nandakumar and Tanya Agrawal contributed reporting.

What to watch Thursday:

• The Labor Department releases weekly jobless claims at 8:30 a.m. Eastern time.
• At 10 a.m., the Institute for Supply Management releases its manufacturing index for September; the Commerce Department releases construction spending for August; and Freddie Mac releases weekly mortgage rates.
• McCormick & Co. (MKC) and Micron Technology (MU) report quarterly financial results.

 

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First published here: http://www.dailyfinance.com/2015/09/30/market-wrap-stocks-rally-end-worst-quarter-since-2011/

I had some prognostications in December or 2014 for the new year. These are apparently quite contrarian in relation to the sell side. Let's take a quick peek and then compare to the smartest guys in the room (you know, the sell side analytical machine) year-to-date...

This is self explanatory, keeping in mind that the S&P 500 was somewhere around 2028 and the 10 yr Treasury was roughly 2.1% on January 1st of this year. 

Notice how I also commented on real estate prices. We have definitive research which shows a definite correction coming,  but more on that later. The question du jour is why so many (as in all) of the sell side banks proffer such bad (actually, inaccurate) research?  Well...

Banks do three things, and three things only

1. They amass capital from one group of people and/or entities and give it to another group, requiring substantial fees along the way, ie. lending and securities underwriting.

1. They move financial assets around the globe, between and amongst individuals and entities, requiring substantial fees for said transactions, ie. securities brokerage

1. They provide financial advice and related transactions, again for significant fees

As those who follow me over the years know, I provide advice. Much of that advice runs circles around the sell side. I'd love to take credit for being hyper-intelligent, but the secret sauce actually lies in muppet mentality and conflicts of interest.

But what about the other components of the banking model?  Well, technology is now available that may prevent guys like me from posting laughable graphics like the one above in the near to medium term future.  

Fully distributed banking models (we're talking full on disintermediation here) combined with independent (which eliminates the "muppet" factors of conflicting interests) advisory businesses can do all of the above while allowing end users to maintain control of their capital while removing the incentive of advisors to "churn" trading and transaction activities.

What would a fully distributed banking system look like and how would it prevent 12 analysts from giving highly inaccurate forecastsforecasts? 

Traditionally, over-the-counter (OTC), or off-exchange trades are brokered between two parties without being subject to a middleman in the from a centralized legacy exchange. The terms of an OTC trade, including any pricing information, are not necessarily published to third parties. In this case,  the middleman is the banking institution. 

In contrast, legacy exchanges provide some pricing transparency and mitigate most credit risk (except that emanating from the exchange itself) in the event of infrequent defaults by trading parties. When they work, these features encourage market liquidity. However, when legacy exchanges fail, either party to a trade may lose value as defaults and evaporating liquidity overwhelm any marginal safety nets.

Fully distributed financial systems brings the benefits of legacy exchanges to OTC transactions, but without the associated costs. Smart contracts enable OTC trades featuring unique characteristics, with publicly published pricing, and where all credit risk and counterparty risk is removed. Liquidity is provided by a distributed, peer-to-peer exchange, which is essentially a mesh network of participants looking to deal directly with each other. Blockchain technology allows them to do so pseudonymously, and without having to detour through a formal entity (not even Veritaseum servers have access to the assets) that can default, collapse, corrupt, or defraud.

Transparency and accountability are unprecedented. The details of every transaction are logged in the blockchain and readily available to all who are privy to the trade. Each node has its own copy. Any entity who wants this information can have it, and all transactions related to it, forever.

What Would Such A System Look Like?

Vertiaseum’s core technology utilizes four major components: the blockchain, a data source (e.g., a ticker feed), Veritaseum’s proprietary server technologies (“Facilitator”) and the  Veritaseum HTML Wallet (essentially, a very advanced web page), which communicates with the Facilitator via an Application Programmer’s Interfaces (API).

First published here: http://www.zerohedge.com/news/2015-09-30/every-single-big-wall-street-got-stocks-and-rates-horribly-wrong-except-heres-why-it

THERE was some brief excitement in the aviation world earlier this week, as rumours swirled about the fall of a dubious industry record. On a trip to Silicon Vally it was suggested that Narendra Modi, the president of India, was going to announce the launch of the world’s longest non-stop plane route: an Air India flight between Bangalore and San Francisco, a journey of around 8,700 miles or 18 hours. As it turned out, the route India’s flag carrier has planned is the 7,670-mile journey from New Delhi to San Francisco. That will last a paltry 16 hours.

For fans of long plane journeys (and who isn't?) it has been a rollercoaster year. In August, Emirates announced the real deal: a 17-and-a-half-hour, 8,590-mile slog between Dubai and Panama, which will begin flying next February. That will easily beat Qantas’s Flight 8 from Sydney to Dallas, which is the currently the world’s...Continue reading

First published here: http://www.economist.com/blogs/gulliver/2015/09/non-stop-flying-records?fsrc=rss

THE term "currency wars" has sparked a vigorous debate within the economics commentariat. The term was coined by Brazil's then finance minister, Guido Mantega, in 2010 when the real was moving sharply higher, a nice irony given the real's recent falls to record lows. Some saw it as a negative development, talking of beggar-thy-neighbour devaluations designed to grab a bigger share of world trade; eventually, this was a zero sum game since all currencies cannot devalue. The counter-argument was that, on the contrary, this was positive for the world economy. Countries were easing monetary policy, either by cutting interest rates or adopting quantitative easing, and the aggregate effect would be to boost global demand. Parallels were drawn with the 1930s when developed countries abandoned the gold standard and those that devalued first, recovered most quickly.

A new (privately circulated, so no link) note from Stephen King, the senior economic adviser at HSBC, argues that the 1930s parallel is incorrect and that, currently

attempts by individual central banks to boost growth and inflation via currency depreciation have been collectively...Continue reading

First published here: http://www.economist.com/blogs/buttonwood/2015/09/exchange-rates-and-economy?fsrc=rss

Filed under: Automotive Industry, Ford, Consumer Protection, Auto Recalls, Products

DETROIT -- Ford (F) is recalling some older Windstar minivans to because a previous rear-axle recall repair might not work.

The recall covers about 342,000 vans from 1998 through 2003. The company said Wednesday that the Windstars were recalled in 2010 due to axle cracks that could grow and lead to complete failure and a crash.

They're being recalled again because a reinforcement bracket from the first recall could have been installed incorrectly. The bracket was designed to mitigate problems if the axle failed. The company says it has reports of a small number of accidents but no injuries. The exact number of wrecks wasn't available.

Dealers will inspect the vans, and if the brackets weren't installed right, replace the axles. If they were correctly installed, customers will be offered a $300 discount on the price of an axle replacement. The recall is taking place in the U.S. and Canada.

Also Wednesday, Ford said it was recalling 37,000 F-150 pickups from the 2015 model year in the U.S. and Canada to fix a problem with the adaptive cruise control system that automatically brakes the trucks to avoid a crash.

The company said that when passing a large truck, the radar could incorrectly determine that it's in the F-150's travel lane when it isn't. The system could apply the brakes until it senses that the truck is no longer in the way.

Ford says it has a report of one crash caused by the problem but no injuries. Dealers will update software to fix the problem.

 

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First published here: http://www.dailyfinance.com/2015/09/30/ford-recalls-windstar-minivans-axle-problem/