The late September spike in Chinese equities was very much a trading rather than an investment move and, having pulled back, is now consolidating. We do not see the authorities trying to boost consumer spending by encouraging borrowing, rather that these latest measures are about providing liquidity and thus allowing the housing market to clear at lower prices. More interesting is the medium term efforts to make savings more productive by building a proper capital market, replacing cash for savers and bank loans for companies with pension funds and capital markets. This looks like the start of that process and we suspect there will thus be a focus on long term investing, solid dividends and well regulated corporate bond and equity markets for savers.

The term "October Surprise' refers to an event that is timed to coincide with US Presidential Elections. While we obviously can not predict any unforeseen event, we can highlight things that are happening that may be brought to our attention this month. One such is the UNIT, the plan for a BRICS+ trading currency, backed by a mixture of currencies and Gold. This is not about replacing the Dollar a s reserve currency, more about replacing SWIFT as a Global Exchange, with wider implications for the FX markets - $6tn a year of Global trade supports $7.5trn a day of FX markets. Take the $ out of half of those trades and the system faces a dramatic reset.\, including diversification away from the $

October has poor seasonality, none worse than in an Election year. After a strong q3, especially for equal weighted SPW (a proxy for active managers), we see caution prevailing in q4, with profits being taken and cash waiting to react rather than trying predict. We don't believe either the US or China are going for a big monetary stimulus and see the latter in particular as allowing creative destruction of the speculative property developers while setting up for a Capital Market with Chinese characteristics. Retail may get excited about China short term, but the long term asset allocation story is the one to buy on the dips. Meanwhile, diversification and the Dollar are a key focus, especially with the BRICS+ summit this month raising the prospects of a new trading currency - the UNIT

The latest moves by China have been mis-interpreted as a 'Bazooka' by the same analysts that got over excited about a Fed 'Pivot'. Stimulative monetary policy is neither needed nor appropriate in the world's two largest economies. Rather this is Chinese authorities continuing their creative destruction of the speculative element of the housebuilder bubble and facilitating the market clearing at lower prices, Far more important is the next phase of stabilising the stock market to form a base for building a Capital Market with Chinese characteristics. We don't trust the spike, but those that can invest in China should have it back on their radar

After the volatility in July and August, some traders had their worst summer in years, being forced out at the bottom or in at the top, ,while those who went to the beach may have returned to find their portfolios little different than they left them. Under the surface however, things are changing, politics in the US are developing fast while the anti Globalist populism in Europe has got stronger in the face of attempts to suppress it. The Fed has acknowledged that the time has come for lower rates, which is switching attention to the prospect of a weaker US$ and the idea that the monopoly profits that underpin the S&P earnings may come under treat from both regulators and global competition is starting to shift the focus from momentum and memes onto cash flow, yields and diversification.