How successful Angela Merkel (familiarly called “Mummy” by the electorate) will be as Chancellor will depend on the stance of the new leader of the Christian Democratic Union (CDU), who will be elected in December. The risk is not only that the new leadership will clash with Merkel as the party tries to reconnect with its conservative roots, but also that it will lead to more frictions with their coalition partner, the Social Democrats (SPD), ultimately leading to the collapse of the government. The relationship between the two is increasingly fraught as both parties try to defend themselves from the rise of the far-right populist party Alternative for Germany (AfD), and this will make policy making very difficult in the short to medium term.

As U.S. equities approach psychological resistance at 3000, portfolio managers will be looking to reduce exposure, which may prove beneficial for commodities.

The level and pace of increase in Chinese banks’ debt-to-GDP ratios are causing rising concerns about over-indebtedness leading to a 2007-08 style crisis for China’s banking and financial system in the coming years. China is fortunate, however, that the debt is between domestic creditors and debtors in yuan, with a large portion of major debtors state-owned and the financial system heavily influenced by the Chinese authorities.

It has been mainly about GBP this morning with resignations from the UK Government and expectations high that there will be more. But risk appetite starting to wane more generally and that's not good news for JPY shorts.

CLZ8 is showing early signs of stabilization as oversold daily momentum studies unwind and the negative Tension Indicator flattens.

While consumer confidence continued to rise in October, we do not expect much change in the NFIB small business optimism index.