Europe

Submitted by Elijah Magnier, Middle East based chief international war correspondent for Al Rai Media

The decision of Kurdistan Regional Government (KRG) leader Masoud Barzani to hold a referendum for Kurdistan independence will define the future of the Kurds in north-east Syria. The international community (headed by the US with numerous military bases in Syria) is directly concerned with the reactions, verbal threats, and measures announced by the countries with a Kurdish majority and bordering Iraqi Kurdistan, i.e. Turkey, Iran, Syria and Iraq.

Fitch has downgraded Deutsche Bank to BBB+ from A- due to continued pressure on earnings, combined with concerns over the prolonged implementation of its recovery strategy.

Moody's and S&P remain at A3 and A- respectively (on a like for like rating basis), and while DB bond yields had fallen to the lowest levels since March 2015, the last few weeks have seen risk picking back up (yields now at 2-month wides) and the stock remains near its recent lows...

Full Statement:

Yesterday, in its latest triennial Survey of Consumer Finances, the Fed admitted what had been obvious to everyone else: Fed policies unleashed over the past decade have made the rich richer, even as the American middle class has continued to shrink.

While the establishment including various central banks, China (which has a "modest" capital flight problem), commercial banks such as JPM and especially its CEO Jamie Dimon who called Bitcoin a 'fraud" similar to the tulip bubble of the 17th century, have come out as harsh opponents of cryptocurrencies, some notable "minority oppinions" have emerged in recent days, such as Morgan Stanley's CEO, James Gorman, who yesterday suggested that Dimon is wrong and that "Bitcoin is certainly more than a fad... the concept of an anonymous currency is an interesting concept."

As noted earlier, the return of the "Trump Trade", however brief, on the back of tax reform euphoria and Hawkish Yellen has dominated market sentiment, resulting in the latest bond market "crash", sending yields to a nearly three month high of 2.35% earlier this morning, and as Bill Blain showed in a chart, it took just three weeks to reverse the fall we saw in July and August, up 30bps in days, while Bunds are up 20bp and even JGBs are up 5bp (far greater rises in relative terms).