On the heels of a veritable bloodbath in Chinese equities overnight which saw the SHCOMP slide a harrowing 8.5%, the entire world is now beginning to take a hard look at the notion that dramatic bouts of selling pressure are aggravated and perhaps triggered by an unwind in the multiple backdoor margin lending channels that allowed investors to skirt official restrictions on leverage and helped to drive the market’s world-beating rally. Here is the complete guide to China's CNY4 trillion shadow margin edifice.
- Chinese shares tumble 8.5 percent in biggest one-day drop since 2007 (Reuters)
- Japan’s Economy Shrank Last Quarter, Top Forecaster Says (BBG)
- Creditor teams in Athens to work on third bailout (AFP)
- Tsipras’s Paradox Is Six Months of Pain and Enduring Popularity (BBG)
- Goldman-Backed Instant Messaging Company Seeks New Investment (WSJ)
- Best Buy will sell the Apple Watch on August 7th (Engadget) - when is it coming to Dollar General?
- Senate votes to revive Ex-Im (Hill)
- U.S.-Turkey Deal Paves Way to Set Up Buffer Zone in Northern Syria (WSJ)
It all started in China, where as we noted previously, the Shanghai Composite plunged by 8.5% in closing hour, suffering its biggest one day drop since February 2007 and the second biggest in history. The Hang Seng, while spared the worst of the drubbing, was also down 3.1%. There were numerous theories about the risk off catalyst, including fears the PPT was gradually being withdrawn, a decline in industrial profits, as well as an influx in IPOs which drained liquidity from the market. At the same time, Nikkei 225 (-0.95%) and ASX 200 (-0.16%) traded in negative territory underpinned by softness in commodity prices.
If the neoconservatives have their way again, US ground troops will reoccupy Iraq, the US military will take out Syria’s secular government (likely helping Al Qaeda and the Islamic State take over), and the US Congress will not only kill the Iran nuclear deal but follow that with a massive increase in military spending. In other words, more and more fires of Imperial “regime change” abroad even as the last embers of the American Republic die at home. Much of this “strategy” is personified by a single Washington power couple...
Amid the 16 (yes sixteen!) candidates for Republican Presidential nominee, there is one, and only one, that stands above the rest in terms of sheer un-filtered, un-political, and some would say un-presidential outspoken-ness. In an oustanding aggregation of abuse, The Hill has documented Donald Trump's Top 30 insults (so far in the 2016 campaign alone).
Despite all her proclamations of new fairness doctrines, false promises of her truthfulness, and exclamations of 'everyday Americanism' Hillary Rodham Clinton is seeing her favorability ratings collapse. As populist as she dares to be, in the face of her donating captors, it appears the everyday American just isn't buying it as Gallup reports just 43% Americans view her favorably (down from 66% just a few years ago) while none other than Bernie Sanders is bounding up the popularity ladder, rising from 12% to 24% favorability in recent weeks.
Following the weakness in Friday's afternoon (China) session, tonight's open is decidedly shaky as Shanghai Composite open down over 2% and CSI-300 (China's S&P 500) is now down over 5%. This follows a year-over-year drop in China Industrial profits (-0.3%), the first since March as the small bounce in April and May is now done. Commodities are lower and silver saw a minor flash-crash shortlty after China opened.
It could never happen again, right?
There are times when a loud cry of “The emperor has no clothes!” can be most copacetic. And so, let me point out something quite simple, yet very important. The old world order, to which we became accustomed over the course of the 1990s and the 2000s, its crises and its problems detailed in numerous authoritative publications on both sides of the Atlantic - it is no more. It is not out sick and it is not on vacation. It is deceased. It has passed on, gone to meet its maker, bought the farm, kicked the bucket and joined the crowd invisible. It is an ex-world order.
If one excludes the gargantuan April merger between Shell and the BG Group, Q2 M&A activity was the slowest in since 2008! If the price of oil continues to decline, one can be certain that Q3 M&A activity will be a dead zone. And since with the exception of just one mega-deal, the merger and acquisition landscape has hit a brick wall, one needs no explanation to understand just how "market participants view future opportunities."
We’ve seen some significant swings in precious metals over the last several years and if we are to believe the paper spot prices and recent value of mining shares, one would think that gold and silver are on their last leg. Last weekend precious metals took a massive hit to the downside, sending shock waves throughout the industry. But was the move really representative of what’s happening in precious metals markets around the world? Or, is there an effort by large financial institutions to keep prices suppressed? In an open letter to the Commodity Futures Trading Commission First Mining Finance CEO Keith Neumeyer argues that real producers and consumers don’t appear to be represented by the purported billion dollar moves on paper trading exchanges. With China recently revealing that they have added some 600 tons of gold to their stockpiles and the U.S. mint having suspended sales of Silver Eagles due to extremely high demand in early July, how is it possible that prices are crashing?
"If the dollar rallies again from here then it is game over and the exit doors are small..."
As dozens now vie for residence in the big white one of Pennsylvania Avenue, MarketWatch, courtesy of LoanDepot.com and CoreLogic, unveil the homes (since most own more than one) and mortgages of the 2016 presidential candidates. With homeownership rates at multi-decade lows, and the American Dream disappearing for most, it appears it pays to be in government - from Trump Tower and Clinton's Compounds to Bernie Sanders' underwater mortgages and Carly Fiorina's five fireplaces...