Today's Headlines

Bloomberg: 

• China’s Zhou Kept Repeating the Bubble ‘Burst’ at G-20 Meeting. Zhou Xiaochuan, governor of China’s central bank, couldn’t stop repeating to a G-20 gathering that a bubble in his country had “burst.” It came up about three times in his explanation Friday of what is going on with China’s stock market, according to a Japanese finance ministry official. When asked by a reporter if Zhou was talking about a bubble, Japanese Finance Minister Taro Aso was unequivocal: “What else bursts?” A dissection of the slowdown of the world’s second-largest economy and talk about the equity rout which erased $5 trillion of value was a focal point at the meeting of global policy makers in Ankara. That wasn’t enough for Aso, who said that the discussions hadn’t been constructive.  

• Japan Isolated by China Complaints as G-20 Embraces Zhou's Plans. Japan was left isolated among Group of 20 nations after Finance Minister Taro Aso criticized a Chinese plan to stabilize its financial markets. While most policy makers at a two-day meeting in Ankara publicly welcomed China’s explanation of how it plans to minimize the disruption from its economic transition, Japanese Finance Minister Taro Aso said the presentation was too short on detail to be useful. Aso was the only delegate to complain about the plan, according to two officials at the talks who asked not to be named. “The issue with China is overblown,” Saudi Arabia’s central bank Governor Fahad Al-Mubarak said in an interview with Bloomberg Television in Ankara. “We’re confident that China is on the path of reform.” 

• G-20 Nations Pledge to Avoid Competitive Devaluations: Statement. The following is the full text of the final communique released by the Group of 20 nations finance ministers and central bankers after a meeting in Ankara on Friday and Saturday. 

• Lagarde Says Fed Must Be Sure of Jobs and Prices Before Moving. The U.S. Federal Reserve must be certain that the job market and inflation are strong enough to justify raising interest rates, the head of the International Monetary Fund said after a Group of 20 meeting focused on the pressure the increase may place on the global economy.

• Volatility Is Back in Global Currency Markets Before Fed Meets. (graph) With the countdown to the Federal Reserve’s September meeting underway, volatility is returning to global currency markets. A gauge of price swings extended its longest streak of gains since January this week amid anxieties about the Fed’s path and a renewed focus on China’s slowdown. Foreign-exchange investors pared positions and moved to traditional havens even as U.S. economic reports show continued growth.

• Maybe Computers Weren't to Blame for August's Stock Selloff After All. Pssst. Maybe it was your money manager. Risk parity—the "all-weather" investment strategy pioneered by Ray Dalio's Bridgewater Associates—has been grabbing all sorts of attention in recent weeks, of the wrong kind. The strategy, in which funds tend to automatically adjust portfolios of bonds, stocks, and other assets in response to higher market volatility, has been blamed by some for exacerbating the recent selloff by shifting holdings into cash. Bloomberg News reported that Bridgewater's All Weather Fund itself is said to have lost 4.2 percent in August. Meanwhile, JPMorgan analyst Marko Kolanovic, who has been vocal about the selling pressures caused by such quantitative funds, said on Thursday that heightened volatility means that risk parity players would probably have to get rid of another $100 billion in stocks in the next one to three weeks.

• VIX Not Budging as Stocks Drop Anew in Week of S&P 500 Setbacks. Want evidence this selloff isn’t like the others? Consider that the VIX, the market’s fear indicator, has now spent 11 straight sessions above 25 -- a level that before August it had touched on just five days since 2011. Or the Standard & Poor’s 500 Index, which through Friday has swung up or down an average of 2 percent a day for more than two weeks. Prior to Aug. 20, the 2015 average was around 0.6 percent. The Dow Jones Industrial Average has suffered declines of more than 270 points in five of the last 12 sessions, the biggest cluster of selloffs since the summer of 2011.

 Wall Street Journal: 

• Thousands of Migrants Pour Into Austria, Germany After Hungary Trek. European foreign ministers discussing how to respond to crisis. Thousands of migrants poured into Austria and Germany on Saturday, as escalating tensions in Hungary forced the two countries to open their borders to one of the largest waves of displaced people since World War II.

• Ben Carson’s Insurgency. The real conservative outsider has been staging a quiet rise. Republican voters have been expressing in every way they can that they’re fed up with Washington and the political class. But as angry as they are about the Obama era of governance, that doesn’t mean they’ll want an angry presidential nominee—or accept brashness as a substitute for conservative reform. Witness the rise of Ben Carson.

• Khamenei the Democrat. The Ayatollah issues a new demand on the nuclear deal. President Obama got the votes he needs this week to survive Congressional rejection of his Iran deal, and now the Administration is looking to bring a few more Senators on board so Democrats can filibuster a final vote on the deal. If the absence of U.S. democratic accountability disturbs you, consider its expression in Iran. We aren’t entirely jesting.

Fox News: 

• Clinton acknowledges paying State Department staffer to maintain private email server. (video) Democratic presidential candidate Hillary Clinton on Saturday confirmed that she and her family personally paid a State Department staffer to maintain the private email server that Clinton used when she led the agency. “We obviously paid for those services and did so because during a period of time we continued to need his technical assistance,” the former secretary of state told reporters after a campaign stop in Portsmouth, N.H.

Zero Hedge

• Don't Forget China's "Other" Spinning Plate: Trillions In Hidden Bad Debt. (graph)

• The Margin Debt Time-Bomb. (graph)

• Europe's Biggest Bank Dares To Ask: Is The Fed Preparing For A "Controlled Demolition".

• "We Do Not Think This Is Sustainable": Barclays Warns On Massive Cost Of China's FX Intervention.

• Why Hedge Fund Hot Shots Finally Got Hammered.

• The IMF Just Confirmed The Nightmare Scenario For Central Banks Is Now In Play.

• Putin Confirms Scope Of Russian Military Role In Syria.

• The Petrostate Hex: Visualizing How Plunging Oil Prices Affect Currencies.

• Global Economic Fears Cast Long Dark Shadow On Oil Price Rebound.

• This Has Never Happened To VIX Before. (graph)

• Did COMEX Counterparty Risk Just Reach A Record High? (graph)

• "This Time May Be Different": Desperate Central Banks Set To Dust Off Asia Crisis Playbook, Goldman Warns.

• For "Fearful, Erratic Markets", China's Reserves Are The New Risk-On/Off Trigger: Goldman.

• Common Core Or "Communist Core". (video)

• Martin Armstrong "Astonished" At Hillary Email Scandal.

• What Does It Mean If The Fed Hikes... And If It Doesn't. (graph)

• Weekend Reading: View From The Edge. (graph)

• No Inflation Friday: The Government Admits Its Own Statistics Are Phony.

• Meanwhile In Submerging Markets: An FX Bloodbath. (graph)

• Dow Drops To 17-Month Lows As Hope-Filled Dead-Cat-Bounce Dies. (graph)

Business Insider:

• Brazil and Argentina are having a border crisis of their own.

• Iran is launching war games focusing on aerial combat.

• White House says it is 'monitoring' reports Russian military is in Syria.

• Wall Street could be 'pulling in their reins' ahead of 3rd-quarter earnings. Slowing growth in emerging markets and currency fluctuations in anticipation of a U.S. interest rate hike may push third-quarter revenue and earnings estimates lower this month. Wall Street expects a 3.4 percent decline in earnings for the S&P 500 for the quarter. Estimates have already fallen for 9 out of 10 of the benchmark index's sectors so far this year, according to Thomson Reuters data. S&P revenue is expected to fall 2.8 percent for the quarter, led by steep declines in the energy and materials sectors.

• An unlikely outsider could be the one who takes down Donald Trump.

• TREASURY OFFICIAL: G-20 members think we need to 'double down' against competitive devaluation.

• Rents in Mayfair and Knightsbridge got hit by China.

• Why this 2,073-foot Chinese building could be an omen of economic doom.

NY Times:

• U.S. Warns Russia Over Military Support for Assad. Secretary of State John Kerry told his Russian counterpart on Saturday that the United States was deeply concerned by reports that the Kremlin may be planning to vastly expand its military support for President Bashar al-Assad of Syria, warning that such a move might even lead to a “confrontation” with the American-led coalition, the State Department said.

Financial Times:

• EM turmoil and strong franc cast shadow over Swiss luxury industry. The biggest problems have come in Asia, where demand has faltered in China and Japan, and collapsed in Hong Kong. But other markets have also proved difficult: the gyrations of the rouble have hit Russian demand — and sales in the UAE, an increasingly important market, have declined.

Telegraph:

• Alexis Tsipras faces shock election defeat as voters on course to punish Syriza at the ballot box. Neutered Leftist party set to lose power to pro-euro conservatives on September 20, according to latest polls.