The One Common Feature In Every Financial Crisis

Spontaneous combustion. Alien invasion. Zombie apocalypse. What do these have in common? Their likelihood is next to impossible. So why worry? This is how people tend to think about the financial system. Mentioning even the possibility, for example, that the US could default on its debt is met with so much scorn and contempt it would be safer to stand on the street corner warning about an alien invasion. The same goes for the imposition of capital controls. Or a collapse in the banking system. Or a currency crisis. And yet the most casual glance at the headlines proves that these events not only can happen, they do happen... and for one underlying reason...

Someone Pull The Plug Or This Will End In War

Yes, it’s still entirely possible that Tsipras submitted this last set of proposals knowing full well they won’t be accepted. But he’s already gone way too far in his concessions. This is an exercise in futility. It’s time to acknowledge this is a road to nowhere.

China's Margin Debt Is "Easily The Highest In The History Of Global Equity Markets"

"The explosion in margin financing behind the recent astonishing run-up in Chinese A shares is a new twist on China credit concerns, a long-standing grey swan for Chinese and global growth. As of the beginning of June, the balance of margin financing outstanding was RMB2.2tn, an estimated 12% of the free float market cap of marginable stocks and 3.5% of GDP—easily the highest in the history of global equity markets."

China's Market Isn't Fixed And Why The Global Bubble Will Keep Imploding

The Chinese economy is in an obvious deepening swoon and the median company on the Shanghai exchange had a PE ratio of 60X before the recent break. But no matter. Not only does everything financial race the skyscrapers to the sky in the land of red capitalism, but valuation upside is apparently whatever the comrades in Beijing want it to be. Says Goldman’s chief stock tout for China,“It’s not in a bubble yet.”. Why? Because “China’s government has a lot of tools to support the market.”

A Serial Short Seller Asks "Do Governments & Central Banks Ever Lose?"

It's true that “the authorities” want the price of financial assets (stocks, bonds) to go up, and the price of hard assets (commodities) to go down… which is exactly what has happened. So do governments and central banks ever lose? In the old days, they lost all the time. In one extreme example, an individual hedge fund took out the entire Bank of England. But central banks are currently on a massive winning streak. So to answer the question, “Will we ever have a crisis,” you need to answer the question, “Will we ever be allowed to have one?”

Crude Slips After Oil Rig Count Rises For 2nd Consecutive Week

For the 2nd week in a row - after declines every week this year - the US oil rig count increased (up 5 to 645). The total rig count rose 1 to 863 (for the 3rd week in a row). The initial reaction was a smal snap below $52.50 but WTI is stabilizing now...

Janet Yellen Explains How Everything Is Awesome (But Not Awesome Enough) - Live Feed

"It will be appropriate at some point this year...to raise the Fed funds rate and normalize monetary policy," Yellen recently explained but given recent comments from Fed heads and the FOMC Minutes, it appears the real meme is "everything is awesome, we promise and as long as it stays that way we will hike rates just a little bit, stand back and watch the implosion, then stand ready to step back in to save the world... oh, and if Greece, China, US Shale, or LatAm blow up contagiously, we won't normalize policy ever again." Yellen speaks on the US economic outlook at The City Club of Cleveland.

Why GM Is Back Below Its IPO Price, Part 2 - Chinese Auto Sales Collapse At Fastest Rate In 3 Years

A week ago we warned of the odd build up in inventories in GM's parking lots in China. It appears those warning were spot on as WSJ reports, China’s new car sales recorded the first year-over-year decline in more than two years in June, as slowing economic growth and falling stock markets hit the world’s largest auto market. “2015 will be an off-year for the Chinese car market,” said Dong Yang, a vice president for the auto manufacturers’ association, and we note auto dealers are seeing orders cancelled at a frenetic pace as it appears stock margin calls are draining the liquidity car-buyers once had.

Caught On Tape: How 'Someone' Spoofed US Treasuries Lower Overnight

Dear SEC, SIFMA, FINRA, CFTC, and anyone else who refuses to pay attention to the man behind the curtain. Following the initial dump in Treasuries after Greek proposal news overnight, bonds started to rally back... it appears that was unacceptable as 'massive' spoofing was then put in place to signal the price of Treasuries lower (yields higher)...